May 7, 2020 / 4:14 PM / in 22 days

Fed funds futures begin pricing in slightly negative fed funds rate in 2021

May 7 (Reuters) - U.S. fed funds futures contracts have begun pricing in a slightly negative fed funds rate in 2021, as the U.S. economy contracts due to business shutdowns designed to stem the spread of the new coronavirus.

The Federal Reserve cut interest rates to zero in March and has launched numerous programs designed to shore up markets and backstop the economy as unemployment soars and growth sputters.

Fed officials including Chairman Jerome Powell have said that they don’t see negative interest rates in the U.S. as appropriate. (Reporting By Karen Brettell)

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