JP MORGAN STRATEGIST: Central banks tried to control the world … and failed miserably
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Over the past decade or so central banks around the world have made some unprecedented moves.
The Federal Reserve kept US interest rates at 0% for seven years.
The Fed, the European Central Bank (ECB), and the Bank of Japan (BoJ) all launched massive quantitative-easing programs.
And most recently, the BoJ joined the ECB in doing what was once unthinkable: instituting negative interest rates.
All of this, of course, was done with the intention of keeping the global economy afloat in the wake of the global financial crisis in 2008.
But according to David Kelly, chief global strategist at JP Morgan Funds, instead of helping the world economy all central banks have done is harm it.
"The most infuriating thing is that central banks think they control the world, and in reality they've failed miserably," Kelly told Business Insider.
"It is truly astonishing that after 20 years of trying and failing to help the economy with low interest rates that they thought that doing something like [negative interest rates] is the answer," said Kelly. "In fact, it might actually be bad for the economy."
The basic idea is that as central banks cut rates it disincentivizes saving since these deposits don't accumulate interest. Additionally, this makes borrowing money cheaper as interest rates are pushed down in response.
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