Former NY Fed President Bill Dudley on negative interest rates

Former NY Fed President Bill Dudley does not think Fed will move to negative interest rates. If they do it will scare people.

Video Transcript

BILL DUDLEY: There was a FOMC meeting a while ago where they reported that all participants were opposed to moving to negative interest rates. And nobody was even slightly interested in it. I think the assessment of the FOMC, the Federal Open Market Committee, is just that the cost of moving to negative interest rates exceeds the benefits.

And I think after showing so much reluctance to even contemplate moving to a negative interest rate, if they were actually to do so, I don't think it'd be reassuring to people. I think people would actually take that as a sign that the outlook was even worse.

The last thing you want to do is introduce a new policy that scares people. You want-- when you introduce a new policy, you want people to be more reassured. And I don't think moving to negative interest rates at this juncture would be helpful in terms of supporting economic activity.