U.S. Asset Manager CEOs Criticize Negative Interest Rates

As the world economy continues to adjust and expand, asset managers are scratching their heads wondering if central banks went too far in driving into negative interest rate territory. Zero interest rate policy (ZIRP) and negative interest rate policy (NIRP) are central banking tools used to stimulate inflation. Simply put, negative interest rates transfer wealth from savers to borrows – a stealth tax on bank deposits. Six world central banks now have negative interest rates, including the Bank of Japan (BOJ), Sweden’s Riksbank and Swiss National Bank (SNB) have introduced negative interest rate policies in a bid to foster economic activity and raise inflation expectations. These central bankers want their domestic banks to lend more.

“The adoption of negative interest rates poses greater investment risk for asset owners with substantial liabilities, if pursued for the long-term. These policies are impacting the viability of savings institutions such as pensions and life insurers, who are now drifting more into illiquid assets and riskier investment strategies,” says Michael Maduell, President of SWFI.

Asset Manager CEOs Sound Off

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