What is a 'Negative Interest Rate'?

Negative interest rates refer to the instance when cash deposits incur a charge for storage at a bank, rather than receiving interest income. ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌

| Term of the Day Negative Interest Rate Negative interest rates refer to a scenario in which cash deposits incur a charge for storage at a bank, rather than receiving interest income. Instead of receiving money on deposits in the form of interest, depositors must pay regularly to keep their money with the bank. This environment is intended to incentivize banks to lend money more freely. Read More » Related to "Negative Interest Rate" How Negative Interest Rates Work Policymakers in Europe are choosing an unconventional strategy of negative interest rates. What could happen? Read More » The Top 6 Ways Governments Fight Deflation Here are six monetary and fiscal policy tools that governments use to fight deflation. Read More » How Unconventional Monetary Policy Works Unconventional monetary policy, such as quantitative easing, can be used to jump-start economic growth and spur demand. Read More » Related Definitions Overnight Rate The overnight rate is the interest rate at which a depository institution can lend or borrow funds that are required to meet overnight balances. Read More » Excess Reserves Excess reserves are capital reserves held by a bank or financial institution beyond what is required by law or regulations. Read More » Negative Interest Rate Policy A negative interest rate policy (NIRP) is a tool whereby nominal target interest rates are set with a negative value. Read More » Monetary Policy Actions of a central bank or other agencies that determine the size and rate of growth of the money supply, which will affect interest rates. Read More » CONNECT WITH INVESTOPEDIA Email sent to: mondemand.forex@blogger.com To update your newsletter preferences or unsubscribe, click here. 114 West 41st St, floor 8 New York NY 10036 © 2019, Investopedia, LLC, All Rights Reserved | Privacy Policy