Buffett: Negative Rates Are More Puzzling Than Scary

The prospect of negative interest rates confounds Warren Buffett but doesn’t frighten him, according to a recent Bloomberg article.

“U.S. policy makers have been seeking to grapple with the economic fallout of the coronavirus pandemic, “ the article notes, citing the Fed’s cutting of its benchmark rate to zero earlier this month.

In his annual shareholder letter (released in February), Buffett contended that equities would outperform long-term, fixed-rate instruments in the long run if current rates and low corporate taxes were to persist. But in an interview with Yahoo Finance after the Fed’s latest rate cut, he noted that it’s difficult to predict the path of rates.

“Interest rates are important,” he said, “but we don’t think they’re knowable.”