## Negative Interest Rate Policies—Initial Experiences and Assessments

## Source details

**Canonical URL:** [Negative Interest Rate Policies—Initial Experiences and Assessments](https://www.imf.org/en/publications/policy-papers/issues/2017/08/03/pp080317-negative-interest-rate-policies-initial-experiences-and-assessments)

## Other formats

- [Markdown version](/en/publications/policy-papers/issues/2017/08/03/pp080317-negative-interest-rate-policies-initial-experiences-and-assessments/index.md)
- [Structured JSON version](/en/publications/policy-papers/issues/2017/08/03/pp080317-negative-interest-rate-policies-initial-experiences-and-assessments/index.json)
- [Bundle manifest](/en/publications/policy-papers/issues/2017/08/03/pp080317-negative-interest-rate-policies-initial-experiences-and-assessments/bundle-manifest.json)

## Bibliographic details
- Published: August 3, 2017

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### Background
- The depth of the crisis and the weakness of the ensuing recovery led to new ways to implement monetary policy.
- At the onset of the crisis, central banks in several advanced economies quickly moved policy rates to zero and initiated large-scale asset purchases.
- In more recent years, with inflation still below target and limited support from fiscal policy, several central banks lowered their policy rates below the previous zero lower bound, embarking on so-called negative interest rate policies (NIRPs).

### Scope and approach
- This paper explores the implications of NIRPs for monetary policy transmission and banks’ behavior.
- It considers potential differences between interest rate cuts in positive versus negative territory on:
  - deposit and lending rates,
  - banks’ interest rate margins and profitability,
  - market functioning.
- The paper focuses on the bank transmission channel, where differences between positive and negative policy rates could arise.
- Finally, the paper reviews cross-country experiences through case studies.

### Key findings and considerations
- Examination centers on how NIRPs may alter the usual transmission of policy rate changes to the economy via banks.
- Important dimensions analyzed include:
  - differential effects of cuts in positive versus negative policy rate territory on deposit and lending rates,
  - potential impacts on banks’ interest rate margins and profitability,
  - consequences for market functioning.

### Bank transmission channel (focus)
- The paper concentrates on the bank transmission channel as the locus where differences between positive and negative policy rates could emerge.
- Specific areas of bank behavior assessed:
  - pass-through to deposit rates,
  - pass-through to lending rates,
  - effects on interest rate margins,
  - implications for bank profitability.

### Cross-country experiences
- The paper reviews cross-country experiences through case studies to inform assessments of NIRPs.

*Negative Interest Rate Policies—Initial Experiences and Assessments, August 3, 2017*

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## Content in this bundle

- **Policy Paper**
  - [Policy Paper (Markdown version)](/-/media/files/publications/pp/2017/pp080317-negative-interest-rate-policies.pdf.md){rel="alternate" type="text/markdown"}
  - [Policy Paper (PDF)](/-/media/files/publications/pp/2017/pp080317-negative-interest-rate-policies.pdf){rel="external" type="application/pdf"}

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_Source: https://www.imf.org/en/publications/policy-papers/issues/2017/08/03/pp080317-negative-interest-rate-policies-initial-experiences-and-assessments_