Jerome Powell, Chairman of the Federal Reserve, said the central bank remains averse to using negative interest rates to respond to the economic impact of the coronavirus pandemic.
"I continue to think, and my colleagues on the Federal Open Market Committee continue to think, that negative interest rates is probably not an appropriate or useful policy for us here in the United States," Powell told 60 Minutes correspondent Scott Pelley.
As coronavirus precautions continue to shut down large parts of the U.S. economy, President Trump this week had renewed his call for negative interest rates, calling them a "gift."
"As long as other countries are receiving the benefits of Negative Rates, the USA should also accept the 'GIFT'. Big numbers!" Trump tweeted on Tuesday. The European Central Bank and Japanese Central Bank have both used negative interest rates as policy, even before the present crisis brought on by the coronavirus pandemic.
Trump has long called for the central bank to lower interest rates, even encouraging the Fed to go into negative territory. Last September, the president referred to the members of the Fed as "Boneheads" in a series of tweets pressuring Powell to lower rates. In a speech at the World Economic Forum this January, Trump reiterated his desire for negative rates.
"We're forced to compete with nations that are getting negative rates, something very new," Trump said. "Meaning, they get paid to borrow money, something I could get used to very quickly. Love that."
As coronavirus precautions shuttered the economy in March, the central bank slashed interest rates to near zero in an emergency action to lessen the pandemic's economic blow. But Powell told Pelley rates likely will not go lower.
As the Fed chair explained, when a country lowers its rates below zero, banks essentially pay people to borrow money. The strategy has precedent—some countries have lowered their rates below zero as a result of the financial crisis last decade.
"There's no clear finding that it actually does support economic activity on net, and it introduces distortions into the financial system, which I think offset that," Powell said. "There're plenty of people who think negative interest rates are a good policy. But we don't really think so at the Federal Reserve."
The video above was edited by Will Croxton.
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