Neg­a­tive Rates can have Dan­ger­ous Im­pact: Fink

The Economic Times - - Commodities Plus -

David Scheer

Black­Rock’s Lau­rence D Fink called neg­a­tive in­ter­est rates “par­tic­u­larly wor­ry­ing” and po­ten­tially coun­ter­pro­duc­tive, as so­cial and po­lit­i­cal risks con­trib­ute to what he de­scribed as the most frag­ile global econ­omy in about a decade.

Na­tions around the world are lean­ing too much on ex­tra­or­di­nary mone­tary poli­cies while fail­ing to make key de­ci­sions and in­vest in in­fra­struc­ture to sup­port long-term growth, Fink, head of world’s big­gest asset man­ager, wrote in an an­nual let­ter to share­hold­ers on Sun­day. The poli­cies are erod­ing in­vestors’ re­turns and putting pres­sure on con­sumers to cut spend­ing as they pre­pare for re­tire­ment, which may ul­ti­mately dam­age the growth that cen­tral banks are try­ing to spur, he said.

“These ac­tions are se­verely pun­ish­ing the world’s savers and cre­at­ing in­cen­tives to reach for yield, push­ing in­vestors into less liq­uid asset classes and in­creased lev­els of risk, with po­ten­tially dan­ger­ous fi­nan­cial and eco­nomic con­se­quences,” Fink said. That and other forces, in­clud­ing geopo­lit­i­cal in­sta­bil­ity, are cre­at­ing “a level of fragility in the global econ­omy.” — Bloomberg

Na­tions around the world are lean­ing too much on ex­tra­or­di­nary mone­tary poli­cies

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