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How Negative Interest Rates Work

Federal Reserve Board Chairwoman, Janet Yellen looks over her papers during a House Financial Services Committee hearing on Capitol Hill, February 10, 2016 in Washington, DC. Ms. Yellen is delivering the Federal Reserve's semi-annual Monetary Policy Report to the House Committee.  (Mark Wilson/Getty Images)
Federal Reserve Board Chairwoman, Janet Yellen looks over her papers during a House Financial Services Committee hearing on Capitol Hill, February 10, 2016 in Washington, DC. Ms. Yellen is delivering the Federal Reserve's semi-annual Monetary Policy Report to the House Committee. (Mark Wilson/Getty Images)

Sweden’s central bank lowered interest rates deeper into negative territory yesterday. Two weeks ago, the Bank of Japan began its policy of negative interest rates. The European Central Bank has done the same. Even Fed Chair Janet Yellen said this week on Capitol Hill that it’s something that U.S. policymakers have considered.

“In the spirit of prudent planning, it is something that, in light of European experience, we will look at, we should look at – not because we think there is any reason to use it, but to know what could potentially be available” she said in a question-and-answer session on Wednesdaybefore the U.S. House Financial Services Committee

To explain how negative interest rates work, Here & Now‘s Peter O’Dowd speaks with Gillian Tett, U.S. managing editor of the Financial Times.

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