Hang on a minute! Haven’t they just put interest rates up? Isn’t the economy supposed to be doing fine?
Here It Comes: New York Fed President Says "If Economy Weakens Further, Would Consider Negative Rates"
15 January, 2016
Remember when the Fed's dots - less than a month ago - suggested there would be 4 rate hikes in 2016? Ah, the memories. Well, you can not only forget that (now that the market is estimating the next rate hike will come in October if ever), but it appears that the Fed will follow Kocherlakota's advice after all and not only cut rates (the possibility of a January rate cut now is 10%), but will pass go, and collect negative rates:
IF ECONOMY WEAKENED, WOULD CONSIDER NEGATIVE RATES
While the comment came from the Dudley Q&A, his full speech can be found here.
And just to add confusion, here is a spurious Bloomberg headline which will hardly aid matters:
SAID IN 2010 JAPAN-STYLE DEFLATION `WORST-CASE SCENARIO'