Banks 'to charge savers'
Your support helps us to tell the story
From reproductive rights to climate change to Big Tech, The Independent is on the ground when the story is developing. Whether it's investigating the financials of Elon Musk's pro-Trump PAC or producing our latest documentary, 'The A Word', which shines a light on the American women fighting for reproductive rights, we know how important it is to parse out the facts from the messaging.
At such a critical moment in US history, we need reporters on the ground. Your donation allows us to keep sending journalists to speak to both sides of the story.
The Independent is trusted by Americans across the entire political spectrum. And unlike many other quality news outlets, we choose not to lock Americans out of our reporting and analysis with paywalls. We believe quality journalism should be available to everyone, paid for by those who can afford it.
Your support makes all the difference.THE AGE of negative interest rates is at hand, according to Chuck Clough, chief investment strategist of Merrill Lynch.
American banks were set to charge savers for the privilege of looking after their money instead of paying them interest, he predicted yesterday.
The practice, virtually unknown except in Switzerland, would make depositing money with a US bank an expensive form of saving. Instead of earning interest, savers would see their deposits shrink in value. It might be easier to spend.
At a seminar in London yesterday Mr Clough said: 'I would not be surprised if short-term interest rates go negative.'
'Banks have more deposits than they can lend out,' he went on. They were keen to reduce deposits and to cut back lending and were busy 'downsizing their balance sheets'.
America was experiencing a credit contraction that would be repeated soon in Japan and then in Europe.
'The US is a laboratory for what will happen in the UK,' Mr Clough added.
He said that in a credit contraction employment did not grow at all, prices and profits did not grow much but cash flow did. 'This is very constructive for the equity market,' he declared.
The third feature of a credit contraction is a fall in interest rates. Short-term rates in the US have come down from 12.6 to 2.9 per cent in the past 10 years.
Join our commenting forum
Join thought-provoking conversations, follow other Independent readers and see their replies
Comments