Can negative rates spur growth? How Mexico could bolster the economy

Can negative rates spur growth? How Mexico could bolster the economy

By Erik Norland, Senior Economist, CME Group

Can negative rates stimulate growth?

  • Negative deposit rates since 2014 have not bolstered eurozone growth
  • Last three rate cuts have strengthened, not weakened trade-weighted euro
  • Stronger euro does not stimulate the economy or generate inflation
  • Should Federal Reserve follow the ECB down the path of negative rates?
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Mexico headed for tough times?

  • For a decade, Mexico avoided any serious economic setbacks
  • In 2019, Mexico is in recession, unemployment is on the rise
  • Mexican peso likely to weaken amid rate cuts, could irk US
  • Mexico’s low debt level could allow for borrowings to boost growth
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