The Fed can only influence short term rates. So I guess the answer is, yes. But isn’t that happening anyway? Inflation hovers around 2%, and rates on savings say, 0.02%. So real net interest would equal -1.94% over one year.[/quote]
And that’s what confuses me…I’m not exactly sure about EU economic stats right now, but the EU is the largest economy in the world IIRC.
Assuming the EU was doing some level of QE – what does that say about the state of the EU economy?
I don’t think even Japan did NIR (negative interest rates).[/quote]
I guess it says the economy is doing really poorly. There’s been quite a lot of focus on the political backlash recently. There is an awful lot of anti European Union feeling amongst member nations, which has something to do with immigration as well as the economy. The social problems seem to get magnified when people suffer economically. Using something like monetary easing is not only counter to the Union’s beliefs, but is also very complex to implement because there is no full political union. Both Sweden and Denmark tried negative rates, but with little effect. The Euro has weakened to 1.35 which is a positive, and a strengthening dollar will help their cause. In the mean time, the anti Union movement will probably pick up a pace.
