Search ForexCrunch

If coronavirus causes Fed to reduce interest rates to near zero, US 10-year treasury rate could follow close behind

Such a scenario means there would be little room for fed to lower rates through large purchases of long-term treasury securities

Such a situation would raise new challenge for federal reserve policymakers

Such an approach should require an explicit guarantee with US treasury to indemnify the fed against losses

In that case the fed should be allowed to purchase a broader range of securities or assets

Alternatively, the Fed could consider a facility to buy a broader set of assets

Remains sceptical about using negative interest rates in the US.