The next global financial crisis could force central banks to cut to unprecedented negative rates.
UBS Investment Bank argues that economies including the UK, Denmark, and New Zealand could see rates as low as -5%.
Bank says that rate cuts in next global downturn would be much more than “a few manageable bips.”
“If the recession were to come today, we’d be in trouble,” Arend Kapteyn, global head of economic research said at a briefing.
LONDON — Global central banks would need to cut interest rates to unprecedented sub-zero rates to have any positive impact on growth and effectively shield their respective economies, according to research from the investment banking arm of Swiss giant UBS.
Writing in its Global Economic Outlook for 2018-2019, a 223-page epic report, the bank argues that global rates remain so low 10 years on from the crisis, that the next major global correction could leave central banks scrambling for ways to stimulate the economy.
Pointing to a chart from the outlook, the banks economists note that global central banks, if they needed to respond as robustly as they did during the 2007-08 crisis, would be forced to drop interest rates as low as -5%. That is quite simply something that …read more
Source:: Businessinsider – Finance