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Hybarger & Associates

Serving Small to Mid-Size Community Banks for over Thirty Years

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    Banking Insights

    The Potential Impact of a Negative Interest Rate Policy

    8/23/2019

     
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    This is not something that we are projecting, and it is certainly not something that we are advocating, but there is increasing talk among US official about the possibility of a Negative Interest Rate Policy in the United States, most recently by the President of the New York Fed.
     
    With the outlook for the US Economy at least having strong headwinds in the future, it is wise to realize that the Fed just does not have enough “firepower” (just 200 more basis points, compared to a traditional 400 bp’s plus) to get a recessionary economy turned around with traditional Monetary Policy tools.

    There is a lot of chatter about Negative Interest Rates in the US, as well as Modern Monetary Policy, which is essentially Quantitative Easing on Steroids.
     
    Therefore, it is good to stay as informed as possible as we continue to venture into “uncharted waters.”

    For more information, consider reading "The Disaster of Negative Interest Policy" written by Thorsten Polleit.

    Rates continue to work lower, and it is becoming an increasingly challenging environment.
    Picture
    Source: The Wall Street Journal

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    • Who We Are
      • Firm's Founder and History
      • Officers
    • Who We Serve
      • Who Are Our Clients
    • What We Do
      • Asset / Liability Management >
        • Budgeting
        • Performance Analysis
        • Forecasting
        • Quality Control
        • ALM Board Reporting >
          • The Directors' Financial Digest
          • The Executive Management Series
          • The Account Level Forecasting Series
        • Alternative Planning Scenarios
      • Interest Rate Risk >
        • Reporting for Interest Rate Risk
        • Assumptions & Back-Testing
      • Portfolio Management & Accounting >
        • The InvestWise Reporting Series >
          • Portfolio Management Series
          • Financial Management Series
          • Econometric Series
        • "Total Return" Investment Strategy
      • Liquidity Risk Management
      • Capital Adequacy & Analysis
      • Dynamic Strategic Planning
      • Comprehensive Funds Management Policy
      • CECL Overview >
        • Historical Analysis
        • "Currently" Identifiable Risks
        • "Specific" Potential Risks
        • Potential "Future" Risks
        • Traditional Reserves vs CECL
      • General Consultation >
        • Holding Company Systems
        • Balance Sheet Pricing Strategies
        • Regulatory Reporting
    • What Our Clients Say
    • How We Interface
      • What happens when we become a Client?
      • How are Fees Determined?