Low for Long: Side Effects of Negative Interest Rates

Atanas Pekanov, Thomas Url and Justus Inhoffen
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Atanas Pekanov: WIFO
Thomas Url: Austrian Institute of Economic Research
Justus Inhoffen: German Institute for Economic Research

in WIFO Studies from WIFO

Abstract: Policy rate cuts in negative territory have increased credit supply and improved the macroeconomic environment similar to cuts in positive territory. Dreaded disruptions to the monetary policy transmission channels as well as adverse side effects on bank profitability have so far largely failed to materialise. Thus, the evidence available today shows that the negative interest rate policy is an effective policy tool. However, systemic risks, including in the non-bank sector, should be closely monitored as negative rates are expected to remain low for longer.

Keywords: Negative Interest Rates; Monetary Policy; NIRP (search for similar items in EconPapers)
Date: 2021 Written 2021-06-11
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Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:wfo:wstudy:67204

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