Insights Markets and Economy

Negative interest rates as a policy tool in the U.S. and Canada: Pros and cons

Will negative interest rates be the next monetary policy tool? Learn more.

Kevin Minas, Michael Sager Nov. 15, 2023 10-minute read

Summary

Discussion of whether negative interest rates should form part of the monetary policy response to the current economic downturn has intensified.
We do not currently assign a significant probability of negative policy interest rates being adopted in Canada or the U.S.
The main catalyst that would cause us to adjust our view is evidence of persistent, significant structural damage to the Canadian and U.S. economies that results from the economic shutdowns implemented in response to COVID-19. Such evidence would be contrary to our current base case forecast.

Written by

Kevin Minas, CFA, CAIA
Client Portfolio Manager, Fixed Income

Michael Sager, PhD

Managing Director and Head, Multi-Asset and Currency Management

CIBC Asset Management