Summary of Negative Interest Rates

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World Economic Forum,

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Negative Interest Rates summary
Negative interest rates are a reality in some countries today. But exactly how do they work?

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In today’s environment of low growth and subdued inflation, central bankers in some countries are experimenting with negative interest rates to see how far they can go to boost economies without inciting a public backlash. But how do negative interest rates work, and are they actually effective in stimulating growth? Economists Jennifer Blanke and Signe Krogstrup delve into the matter in this informative report, outlining the practical aspects and potential ramifications of negative interest rates. getAbstract recommends their succinct and accessible article to investors and executives for its perspective on a new wrinkle in monetary policy.

In this summary, you will learn

  • Which countries have instituted negative interest rates
  • How the rates work in theory and in practice
  • How effective they’ve been so far in spurring growth
 

Summary

The subpar economic growth of recent years has led some central banks to venture into negative interest rate territory in a bid to boost inflation and growth. The Danish central bank started the trend in 2012, followed by some European central banks in 2014 and the Bank of Japan in 2016. Though negative...
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About the Authors

Jennifer Blanke is chief economist at the World Economic Forum. Signe Krogstrup is an adviser with the International Monetary Fund’s research department.


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