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.

Bloomberg reports:

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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