Can negative interest rates stimulate growth?

As I see it, the Fed still has to do more. More important, Congress will have to do much more, says Lin See-Yan.

I TAKE off from when I last discussed negative interest rates (NIRs) in my Sept 28,2019 column: “Getting to Grips with the World of Negative Rates.”

Since then, the world has drastically changed. Covid-19 and the sharp fall in global demand left everything in virtual standstill. The OECD expects the rich world’s GDP to fall 6% in 2020. Even the United States, where growth was the best ever in the second half of 2019 (2H19), will contract by 6%–7% this year, with unemployment lingering in double digits. Are NIRs needed now to stimulate growth? NIRs remain unconventional. The Swedish Riksbank (central bank) first adopted it in 2009.