Some traders bet the Fed will push interest rates negative next year

[Zorro]

Despite pushback from the Federal Reserve, some traders appear to be pricing in expectations that policy makers will push rates below zero.

Based on trading in fed fund futures, market participants see rates turning negative next year amid worries that the Fed has all but expended its tools to cushion growth and keep financial markets functioning as the COVID-19 pandemic wreaks havoc on the economy.

“Until they can credibly prove they won’t go down that road, negative rates will continue to be a topic of discussion,” said Jon Hill, interest-rate strategist at BMO Capital Markets, in an interview.

Yet senior Fed officials have argued that negative rates were not appropriate for the U.S., even if they were seen elsewhere in countries like Japan and in the eurozone.

https://www.marketwatch.com/story/some-traders-are-betting-the-fed-will-push-interest-rates-negative-next-year-2020-05-07

Don't like the sound of this.

[roamer65]

1. I fully expect it.

The Fed is going to make it as painful as possible to sit on cash.

Banks will limit withdrawals as well, to stop the rush to physical cash.

[jimfields33]

2. It's hard to speculate when Biden very well could be president and have his own fed chair

Everything could change.

[dixiegrrrrl]

3. We are already mostly there..........

Central banks impose the drastic measure of negative interest rates when they fear their national economies are slipping into a deflationary spiral, in which there is no spending—and hence, dropping prices, no profits, and no growth.
With negative interest rates, cash deposited at a bank yields a storage charge, rather than the opportunity to earn interest income; the idea is to incentivize loaning and spending, rather than saving and hoarding.
In recent years, several European and Asian central banks have imposed negative interest rates on commercial bank

https://www.investopedia.com/articles/investing/070915/how-negative-interest-rates-work.asp