Warren Buffett says 'the most important question in the world' is what negative interest rates would do to markets

• Warren Buffett can't say what negative interest rates would do to US financial markets.
• "I would say that's the most important question in the world," the billionaire investor told Yahoo Finance last week. "And I don't know the answer."
• "It's really crazy," the Berkshire Hathaway CEO said about Treasury yields plunging to record lows last week.
• Buffett happily admitted he can't predict what interest rates, businesses, or the stock market will do in the future, but added, "That doesn't mean I can't do well investing over time."
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The Federal Reserve slashed interest rates to between 0% and 0.25% in response to the coronavirus threat on Sunday, raising the prospect of negative rates in the US for the first time in history. Warren Buffett can't say what that would mean for financial markets, but he recognizes it's a big deal.

"It's unbelievable," the billionaire investor and Berkshire Hathaway CEO told Yahoo Finance last week.

Central banks often stimulate their economies by reducing interest rates, which cuts the cost of borrowing and encourages spending and investing rather than saving.

Japan and some European countries have gone further, slashing rates below zero. Negative rates mean lenders must pay their central bank to hold their reserves. Some banks pass those costs on to consumers, demanding storage fees to take their money.

If negative rates are rolled out in the US, the implications for financial markets are unclear even to Buffett.

"I would say that's the most important question in the world," Buffett told Yahoo Finance. "And I don't know the answer."

"Now, if we knew the answer, it wouldn't be the most important question," he added.

Regardless of what negative rates would mean, Buffett wasn't worried.

"They puzzle me," he said. "But they don't scare me."

Buffett also expressed his astonishment at plunging yields on government bonds - the entire Treasury yield curve fell below 1% for the first time ever last week. "It is really crazy," he said.

"I can't do any of those things"

Buffett cheerfully admitted to Yahoo Finance that he had no idea what the future holds for interest rates. However, the so-called "Oracle of Omaha" dismissed that fact as irrelevant.

"It's the same way as predicting what business is going to do, what the stock market's going to do," he said.

"I can't do any of those things. But that doesn't mean I can't do well investing over time."