The negative rates experiment doesn’t look successful

Although a growing number of central banks are resorting to negative key rates, there is no indication that the additional cuts are having any meaningful impact on credit and economic activity. While negative rates have helped weaken the currencies of some economies, they are a dangerous game whose positive effect would evaporate if all central banks resorted to this strategy. Reignited fears about the European financial sector and the negative reaction of Japanese consumers also show the undesirable effects of negative rates. In our view, this strategy should be seriously reconsidered.