Fed’s Powell may squash idea of negative rates, even as Trump says US would benefit

Federal Reserve Chairman Jerome Powell is expected to strongly oppose the idea of negative interest rates when he speaks Wednesday, though President Donald Trump Tuesday said they would be a benefit to the U.S.

Powell is expected to take the opportunity to talk down market speculation about negative interest rates, when he appears in a 9 a.m. ET webcast with the Peterson Institute for International Economics. For the first time ever, the fed funds futures market last Thursday priced in slightly negative rates starting this fall.

Since Friday, a number of Federal Reserve regional bank presidents, like Richmond Fed President Thomas Barkin and Chicago Fed President Charles Evans  knocked the idea of negative rates and said the Fed has no plans for them.

The futures market has since reversed some of the implied negative rates for the fall and winter, but April, 2021 futures still price the slightly negative rate of minus 0.0