(Reuters) - U.S. President Donald Trump tweeted with envy on Wednesday about the ultra-low, even negative interest rates in other parts of the world, berating what he called the “boneheads” at the Federal Reserve for not following suit.
But Trump would be well-advised to be careful what he wishes for lest he get it - and all the troublesome economic baggage that comes with it.
By setting interest rates below zero, policy-makers penalize banks for leaving excess cash with their central banks in the hope that it will spur lending and in turn boost business investment and consumer borrowing and spending.
As economic policy tools go, negative interest rates have a checkered track record in achieving any of those goals.
In the sluggish economic landscape that has persisted in the wake of the financial crisis a decade ago, five central banks around the world have adopted negative interest rates, including the two largest after the Fed: the European Central Bank and the Bank of Japan.
None have scored lasting wins with the effort.
“What good has it done there in Europe?” said Mary Ann Hurley, vice president of fixed income at D.A. Davidson in Seattle. “They don’t help banks. It might help the governments of the issuing countries.”
Fed officials, looking at the experience of their overseas colleagues, remain highly skeptical.
The following charts show how the negative rates experiment has played out in the five economies that have tried them.
EUROPE
The ECB introduced negative rates in 2014 in the face of chronic disinflation and low growth. It is expected to cut its benchmark rate deeper into
