0% Rates Needed for Market Recovery: Strategist

U.S., European and Japanese interest rates need to be slashed to practically zero if there's any chance of a market recovery, Roger Nightingale, strategist at Pointon York, told CNBC Friday.

"I'm not talking about 50 basis points … we really have to take rates down to effectively zero," Nightingale said, pointing out that U.S. rates "got down to one percent in the last recession and that wasn't a bad one."

 

"The Europeans have to go to zero, the Brits have to go very close to zero, the Japanese of course haven't got much room, they certainly have to go to zero," Nightingale said, adding that even zero might not be low enough for the U.S. to escape a deep, protracted slump.

Many of the world's major central banks cut their base rates by 50 basis points last week in a coordinated move. The cuts were designed to help the global economy deal with the fallout from the credit crisis, but stock markets have remained highly volatile since then.

 

A base rate near to zero would help start a recovery in the bond market and ultimately in equities as well, Nightingale said.

If central banks leave it too long before cutting rates, they will be too late, according to Nightingale, who citied the protracted recession in Japan during the 1990s as an example of how bad things could get.