What Are 'Negative Interest Rates'?

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 | Words to Know Negative Interest Rate Negative interest rates occur when borrowers are credited interest rather than paying interest to lenders. This unusual scenario is most likely to occur during a deep economic recession when monetary policy and market forces have already pushed interest rates to their nominal zero bound. Read More » Related to "Negative Interest Rate" 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 » What Happens to Interest Rates During a Recession? Interest rates do not rise in a recession; in fact, the opposite happens. So much so that rates can often float into negative territory. Read More » Six Ways Governments Fight Deflation Here are six monetary and fiscal policy tools that governments use to fight deflation. Read More » SPONSORED BY INVESCO What is an Exchange-Traded Fund? An ETF is a basket of securities that may consist of stocks, bonds, commodities, or other financial assets. Invesco offers a deep dive into this versatile asset. Learn More » Related Definitions Target Rate Target rate is defined as the interest rate charged by one bank for an overnight loan of money stored at the Federal Reserve to another bank. Read More » Lender A lender is an individual, a public or private group, or a financial institution that makes funds available to another with the expectation that the funds will be repaid. Repayment will include the payment of any interest or fees. 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 » Economic Growth Economic growth is an increase in an economy's production of goods and services. 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 © 2020, Investopedia, LLC, All Rights Reserved | Privacy Policy