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Negative Interest Rate Policies: A Survey

Marco Casiraghi, Gunes Kamber, Roland Meeks and R. Gaston Gelos

No 16016, CEPR Discussion Papers from C.E.P.R. Discussion Papers

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.

Keywords: Negative interest rates; Monetary policy; Bank lending; Bank profitability; Nonbank financial institutions (search for similar items in EconPapers)
JEL-codes: E43 E52 G21 G22 G23 (search for similar items in EconPapers)
Date: 2021-04
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