Trump wants the Federal Reserve to cut interest rates 'to zero, or less.' It's happening in other countries.
Negative interest rates are a real thing. But don’t expect your local bank to start paying you to borrow money.
“It’s just not relevant here in the U.S.; this is much ado about nothing,” said Greg McBride, chief financial analyst at Bankrate.com. “We’re a long, long way from this” in the United States, he said. In turn, rates on home mortgages and new-car loans have moved lower this year. The average rate on a 30-year, fixed-rate mortgage is 3.56%, down from 4.51% at the start of the year, according to Freddie Mac. The rate on a five-year loan for a new car has dropped to 4.62% from 4.96%, Bankrate data show.
The low-rate environment also has kept a lid on earnings for American savers for the last few years. A one-year certificate of deposit now yields an average of 0.85%, Bankrate figures show. Still, that’s up from 0.30% three years ago.Countries such as Germany, Denmark and Japan are among those who have issued debt securities in recent years that now carry a negative yield, usually because the securities’ prices have been bid higher and that sent their low coupon rates below zero.
Regardless, why would anyone buy a government bond that’s yielding negative interest, much less bid its price higher? Peter Heilbron, chief executive of Trace Wealth Advisors in Sherman Oaks, said there also are reasons those investors don’t shift a lot of their assets from bonds to other so-called havens such as gold and short-term money-market funds.
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