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 | 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 Negative Interest Rates Work Policymakers in Europe are choosing an unconventional strategy of negative interest rates. What could happen? 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 FIDELITY INVESTMENTS When Others Step Back, Fidelity Steps Up Attracting the next generation of talented associates is a top priority for the Fidelity leadership team. Here's what they're doing to navigate the current crisis. Learn 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 » Sign Up for 'Chart Advisor' Want more Investopedia market news? Investopedia's expert analysts present market performance for the day and discuss with in-depth charting and technical analysis, a must read for traders. Subscribe» 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 © 2020, Investopedia, LLC, All Rights Reserved | Privacy Policy