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What is Negative Interest Rate Policy?:

A negative interest rate policy is an unconventional monetary policy tool employed by Central Banks where the nominal interest rate is below zero hence the term negative. It is unconventional because instead of the depositors earning money for their deposits in Banks, the depositors are charged for their deposits in the banks. Negative interest rate do not directly impact small investors but can indirectly have effect from the spillover of banks having deposits at other big banks/central banks.
Why Negative Interest Rate Policy?

The policy of negative interest rate is employed when the central bank observes in its economy of the following :
  1. Low or no growth
  2. Deflation
  3. Hoard of money by people and business
Central Bank’s policy aim is to make people and businesses to spend and invest money instead of keeping money at the bank and to stop prices from falling, increase real production and output, and decrease of unemployment. Such loose and expansionary monetary policy is employed usually to deal with such stagnation in the economy.
When a Central Bank has set a negative interest rate, it means depositor will be charged for keeping their mone…
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zarina avatar
zarina 27 Feb.

You are waiting for the fall of the Euro ?

Nihad avatar
Nihad 27 Feb.

Good luck buddy

wisdom_consultant avatar

nice article

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Introduction:
Interest Rate is among the most important fundamental data that impacts the currency of a country. It's of vital importance for any trader to keep a watch on this important data for his or her trading activities. A change in Interest Rate viz. a hike or a cut could be a percursor to a long term bearish or bullish bias respectively on the currency.
Interest Rate is the also most important tool major Central Banks around the world like FED, ECB, BOJ, PBOC etc use to guide the economy and the overall markets to its desired goals. Interest Rates are set by Central Banks to majorly keep inflation within a limit and to promote or curb lending. For instance, if prices for essential items and inflation are ballooning in conjunction with better economic conditions, Central Banks will hike Interest Rate to curb money supply to control price rise and inflation.
How Rates are calculated? :
Board of Directors of Central Banks controls the monetary policy of its country. They set the short-term interests at which banks can borrow from one another. Central Banks gather various relevant economic indicators from its economy to decide on Interest Rates to keep as its is or to cut o…
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Natalia_Kisenko avatar

good job!

Jenny26 avatar
Jenny26 18 Feb.

nice article))

zarina avatar
zarina 19 Feb.

done a good article!

Olkiss70 avatar
Olkiss70 21 Feb.

useful work!

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