World News

Bank of America warns negative U.S. rates could hurt operations

By Imani Moise

(Reuters) – Bank of America Corp <BAC.N> cited the possibility of negative interest rates in the United States as a business risk for the first time in a filing on Wednesday.

The unconventional policy measure has been a talking point for President Donald Trump, who has critiqued the Federal Reserve for raising interest rates earlier in his presidency.

Historically low interest rates since the 2008 financial crisis have limited how much banks can make from their lending services. After years of small increases, the Federal Reserve cut interest rates three times last year, crimping bank earnings and leading Bank of America to give a downbeat lending revenue outlook for 2020.

“A move to negative interest rates in the U.S., could result in lower revenue, and maintain or increase pressure on net-interest income, which may adversely affect our results of operations,” the bank said in a filing.

Some countries have recently resorted to negative interest rates, which charge banks interest on deposits to get them to lend more in a bid to jumpstart the economy. Switzerland, Denmark, Sweden and Japan have allowed rates to fall to slightly below zero.

U.S. Federal Reserve Chair Jerome Powell has signaled that the U.S. monetary authority will keep rates above zero, telling Congress that negative interest rates are not appropriate for a U.S. economy with ongoing growth, a strong labor market and steady inflation.

(Reporting by Imani Moise; Editing by Lisa Shumaker)