Negative interest rate policies
Central banks - monetary policy - unconventional monetary policy.
In response to the Global Financial Crisis some central banks set negative policy interest rates.
"They found that, overall, this strategy was effective... long-term yields adjusted downwards in line with expectations of future short-term rates, thus providing the desired expansionary stimulus.
Although side effects, such as the compression of bank interest margins, were detected, they have not posed a major problem for banking stability to date because of offsets from other sources of income and the eventual recovery of bank portfolio values, including [a reduction] in non-performing loans.
That said, the potential longer-term effects of a prolonged period of negative rates on intermediaries cannot be fully assessed on the basis of current experience."
Source: 'Unconventional monetary policy tools: a cross country analysis'. Committee on the Global Financial System. October 2019
- Central bank
- Committee on the Global Financial System
- Effective lower bound
- Forward guidance
- Global Financial Crisis
- Lending operations
- Margin compression
- Non-performing loan
- Policy interest rate
- Quantitative easing
- Reserve requirements
- Sterling Monetary Framework
- Supply side policy
- Unconventional monetary policy
- Zero lower bound
- ZLB problem