Negative Interest Rate Policies: A Survey

35 Pages Posted: 14 May 2021

See all articles by Luis Brandao-Marques

Luis Brandao-Marques

International Monetary Fund - Monetary and Capital Markets Department

Marco Casiraghi

Bank of Italy; International Monetary Fund (IMF) - International Capital Markets Department

Gaston Gelos

International Monetary Fund

Gunes Kamber

International Monetary Fund

Roland Meeks

International Monetary Fund

Date Written: April 2021

Abstract

This paper surveys studies on the impact of central bank negative interest rate policies (NIRP). It reviews recent research on the effects of NIRP on financial markets, banks, households, firms, and the macroeconomy. Overall, policy rate cuts when interest rates are negative propagate along the yield curve, with the first policy cut below zero contributing significantly to the fall in longer-term yields. Lending and deposit rates also decrease following the adoption of NIRP. Based on the experience so far, bank lending volumes have risen, and bank profits have not significantly deteriorated, although there is considerable heterogeneity in the effects. The impact of NIRP on inflation and output appears to be comparable to that of conventional interest rate cuts.

JEL Classification: E43, E52, G21, G22, G23

Suggested Citation

Brandao-Marques, Luis and Casiraghi, Marco and Casiraghi, Marco and Gelos, R. Gaston and Kamber, Gunes and Meeks, Roland, Negative Interest Rate Policies: A Survey (April 2021). Available at SSRN: https://ssrn.com/abstract=3846101

Luis Brandao-Marques (Contact Author)

International Monetary Fund - Monetary and Capital Markets Department ( email )

700 19th Street, N.W.
Washington, DC 20431
United States
2026238308 (Phone)
2025898308 (Fax)

Marco Casiraghi

Bank of Italy ( email )

Via Nazionale 91
Rome, 00184
Italy

International Monetary Fund (IMF) - International Capital Markets Department ( email )

700 19th Street NW
Washington, DC 20431
United States

R. Gaston Gelos

International Monetary Fund ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Gunes Kamber

International Monetary Fund ( email )

Roland Meeks

International Monetary Fund ( email )

Kuwait

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