Negative Interest Rates...

JezR

With negative gilt yields on sale but positive interest in deposit it enables arbitrage opportunities for banks and their reserves. Making the return on deposited reserves negative would remove that.

InA

Countries that have implemented negative rates have experienced unintended consequences, such as inflated asset prices, without an appreciable increase in lending. Banks don't do well in low interest rate environments and such a move may be counterproductive if it makes banks more risk averse. 

I believe, in places like Germany, where negative rates have been passed on to savers, this has only applied to savings above a relatively high threshold (above €100000). IMO, if  negative rates are implemented here, it's unlikely to be passed on to savers without a significant backlash against any institution daring to do so.

Although many of us are content to keep our savings in below inflation accounts, seeing a paper-loss in the form of a negative interest rates involves a different psychology. I don't think people would put up with that for what should be a risk-free financial product.

John_

Malkytheheed said:

So, The US have hinted at it.
Could well happen here too. 
If we do end up in a situation of Negative interest rates then how to maximise the situation presonally? Our savings are doing nothing at that point, we may even have to pay to keep them in the bank. But what about getting interest free loans or even being paid to take a loan. How to use this to our advantage financially? 

You will not be paid to take a loan. 

jsinc

DiggerUK said:

Bonds are nothing to do with central bank base rate. Negative interest rates are a different kettle of fish to negative government  bonds..._

That firstly depends whether you believe market rates follow bank rate or vice-versa. And if you believe the former then you should also believe prices/yields factor in expectations of bank rate.

A._Badger

RG2015 said:

There is a lot of speculation on this at the moment but that is all it is. For example, Donald Trump apparently thinks it may be a good idea.

But he is also taking Hydoxychloroquine to stop him contracting Covid-19 or to cure him if he gets it.

I wonder if the multi-millionaire President of the United States, advised by some of the world's most skilled and experienced bankers, economists and medical experts might know more than an anonymous commenter on a small UK forum?

lhsecons

Since he recently suggested injecting yourself with bleach, I suspect he may not!!

MaxiRobriguez

The U.S government is bereft of intellectualism, but that doesn't mean their advisors suffer the same, nor do the U.S at large.

A country can still operate without a properly functioning government - case in point being the UK. 

A._Badger

lhsecons said:

Since he recently suggested injecting yourself with bleach, I suspect he may not!!

This is in danger of getting completely off topic but you do know he didn't say that, don't you? Because if you don't, you might want to try getting your news from other sources than BBC 'comedy' shows and Twitter.  

RG2015

A._Badger said:

RG2015 said:

There is a lot of speculation on this at the moment but that is all it is. For example, Donald Trump apparently thinks it may be a good idea.

But he is also taking Hydoxychloroquine to stop him contracting Covid-19 or to cure him if he gets it.

I wonder if the multi-millionaire President of the United States, advised by some of the world's most skilled and experienced bankers, economists and medical experts might know more than an anonymous commenter on a small UK forum?

Are you suggesting that The Donald takes advice from anyone other than himself?

And just because we are anonymous it does not mean that we do not have a valuable contribution to make.

RG2015

A._Badger said:

lhsecons said:

Since he recently suggested injecting yourself with bleach, I suspect he may not!!

This is in danger of getting completely off topic but you do know he didn't say that, don't you? Because if you don't, you might want to try getting your news from other sources than BBC 'comedy' shows and Twitter.  

Fact check. No, he did not suggest injecting bleach but yes, he did announce that he was taking Hyroxychloroquine.

Whilst he did say the latter, there is nothing to say that it is actually true.