MANILA - As central banks around the world cut interest rates to boost their economies, the head of one of the world's largest financial companies said interest rates can only do so much and businesses want "clarity" more.
Citi CEO Mike Corbat said cutting rates won't necessarily stimulate economic activity, as businesses hold off on investing amid uncertainties over issues like the US-China trade war, the US-Mexico-Canada trade deal, and Brexit.
"We can have the conversation in terms of whether or not quantitive easing in some places has overstayed its functionality," Corbat said in an exclusive interview with ANC's The Boss.
He said the financial industry was particularly affected, as interest rates in Europe are already negative.
"Banks weren't really built around a business model of negative rates," Corbat said.
Besides not being able to charge fees for holding clients' money, businesses also don't necessarily borrow more because rates are low, he added.
"What businesses want is clarity and we can invest on the back of that," Corbat said.
Despite the uncertainties over trade issues, the global economy remains resilient, Corbat said, thanks to consumption.
Consumers powered the recovery of the world economy following the global financial crisis, and they are behind the resilience of the world economy today, the Citi chief said.
"The consumer has been phenomenally resilient and remains so today."
Corbat said he is also optimistic about the digitalization of finance, and Citi will continue to "invest heavily" in technology.
Citi recently partnered with Grab to launch a co-branded credit card in the Philippines, the first in Southeast Asia.