Once upon a time, there came a negative rate…
A cartoonist's look at what happens when rates go negative.
Haruhiko Kuroda and Mario Draghi may be among the few economists who still think negative interest rates are a good idea.
The Bank of Japan governor’s decision last month to charge banks on some excess reserves, a year and a half after his counterpart at the European Central Bank took a similar path, means that a quarter of the world economy is now in the sub-zero club.
Yet just 27 percent of respondents in a Bloomberg survey say negative rates will help Kuroda reach his goal of boosting feeble inflation, and only 42 percent say the policy is succeeding in the euro area. While the strategy has shown it can weaken currencies — one channel for spurring consumer prices — the discussion over how long that can last and the likelihood of unintended consequences is getting louder.
(More: Putting negative interest rates in perspective)
The following is a cartoonist’s view on what happens when rates go negative.
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