The Fed Seeks To Test How Banks Would Handle Negative Interest Rates (02/03/2016)
At the end of 2016 Wall Street economists repeated Fed predictions of four rate hikes.
With stock market turmoils those predictions have turned into a joke and now Fed officials are hopeful that things will stabilize, but are also preparing for disaster.
In its annual stress test for 2016, the Fed said it will assess the resilience of big banks to a number of possible situations, including one where the rate on the three-month U.S. Treasury bill stays below zero for a prolonged period.
"The severely adverse scenario is characterized by a severe global recession, accompanied by a period of heightened corporate financial stress and negative yields for short-term U.S. Treasury securities," the central bank said in announcing the stress tests last week.
Full story here.
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