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What are Negative Interest Rates? | Negative Interest Rates Explained

  • August 24, 2020 03:49 PM AEST
  • Team Kalkine

What are Negative Interest Rates? | Negative Interest Rates Explained

Gold MTF non-AMP

While it may sound strange, Central Banks sometimes implement negative interest rate policy, slashing interest rates below zero percent to wade economies through unprecedented challenges. Though negative interest rates encourage borrowing by pushing loan rates to bottom low levels, they discourage savers who have to pay banks for storing their money in deposits.

The European Central Bank was the first monetary authority to implement a negative interest rate policy, to deal with the Eurozone Crisis in 2014. Besides, the Bank of Japan has also kept its interest rate negative since 2016 in order to fight off deflation.

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