NIRP: Difference between revisions
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imported>Doug Williamson m (Add full stop.) |
imported>Doug Williamson m (Add "it" in "as low as it may". Change "It effects this" to "The central bank effects this" to avoid repeating "it". Amend "instructions" to "institutions".) |
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Abbreviation for Negative interest rate policy. | Abbreviation for Negative interest rate policy. | ||
NIRP is a policy of a central bank to keep (short-term) interest rates in the economy as low as may. | NIRP is a policy of a central bank to keep (short-term) interest rates in the economy as low as it may. The central bank effects this by reducing its own interest charges for borrowings by financial institutions or its payments of interest on deposits taken from those institutions not merely to a 0% nominal rate but to some actually negative nominal rate. | ||
Note that the [[real interest rate]] in the economy may be negative or positive irrespective of the nominal rate being negative, it being the difference between rate of inflation in the economy and interest rates paid or received. | Note that the [[real interest rate]] in the economy may be negative or positive irrespective of the nominal rate being negative, it being the difference between rate of inflation in the economy and interest rates paid or received. | ||
Revision as of 17:18, 13 July 2014
Abbreviation for Negative interest rate policy.
NIRP is a policy of a central bank to keep (short-term) interest rates in the economy as low as it may. The central bank effects this by reducing its own interest charges for borrowings by financial institutions or its payments of interest on deposits taken from those institutions not merely to a 0% nominal rate but to some actually negative nominal rate.
Note that the real interest rate in the economy may be negative or positive irrespective of the nominal rate being negative, it being the difference between rate of inflation in the economy and interest rates paid or received.
