Ex-Fed’s Fischer: Fed feared negative interest rates

Former Federal Reserve (Fed) Stanley Fischer addressed a farewell conference for Bank of Israel Governor Karnit Flug in Jerusalem on Sunday, with the key comments reported by Reuters found below.

“The possibility of having a negative interest rate frightened the heck out of everybody who had to set the interest rate.”

“What really concerned people was, ‘If we raise the interest rate, will we have to reduce it, and if we have to reduce it, will it go negative?’”

“This led to interest rate raising aversion. So the interest rate was kept between zero and 25 basis points for several years.”

“There was a large public aversion to going negative, so it was fortunate that we didn’t get into that situation.”