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Negative Interest Rates
Article

Negative Interest Rates

Absolutely Everything You Need to Know

Jennifer Blanke and Signe Krogstrup
World Economic Forum, 2016
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Editorial Rating

8

Qualities

  • Well Structured
  • Overview
  • For Beginners

Recommendation

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.

Take-Aways

  • The subpar economic growth of recent years has led a few central banks to venture into negative interest rate territory in a bid to spur inflation and growth.
  • Negative interest rates could provide stimulus by inducing banks to lend, businesses to invest, individuals to consume and nations to export.
  • Countries with negative interest rates have yet to see any major boost to growth, mostly because the rate cuts so far have not been big enough.

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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