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The recent application of negative policy interest rates in the euro area and in other economies: rationale and preliminary evidence on their effects

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  • Jorge Martínez Pagés
  • Antonio Millaruelo

Abstract

This article analyses the recent application of negative policy interest rates by several central banks, including the ECB. The preliminary evidence presented suggests that the use of this additional monetary policy headroom appears to have been effective in the euro area, prompting — together with the other expansionary measures — easier financial conditions. The article also discusses possible adverse effects associated with the application of negative interest rates.

Suggested Citation

  • Jorge Martínez Pagés & Antonio Millaruelo, 2016. "The recent application of negative policy interest rates in the euro area and in other economies: rationale and preliminary evidence on their effects," Economic Bulletin, Banco de España, issue JUL, pages 3-13, July.
    • Handle: RePEc:bde:journl:y:2016:i:7:n:4
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    File URL: http://www.bde.es/f/webbde/SES/Secciones/Publicaciones/InformesBoletinesRevistas/BoletinEconomico/descargar/16/jul/files/be1607-art4e.pdf
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    Cited by:

    1. Philipp Hartman & Frank Smets, 2018. "The European Central Bank’s Monetary Policy during Its First 20 Years," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 49(2 (Fall)), pages 1-146.
    2. Alessandro Galesi & Galo Nuño & Carlos Thomas, 2017. "The natural interest rate: concept, determinants and implications for monetary policy," Economic Bulletin, Banco de España, issue MAR.
    3. Alessandro Galesi & Galo Nuño & Carlos Thomas, 2017. "The natural interest rate: concept, determinants and implications for monetary policy," Economic Bulletin, Banco de España;Economic Bulletin Homepage, issue 1/2017.

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