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Monetary Policy Pass-Through to Interest Rates: Stylized Facts from 30 European Countries

Author

Listed:
  • Robert C. M. Beyer
  • Ms. Ruo Chen
  • Florian Misch
  • Claire Li
  • Ezgi O. Ozturk
  • Mr. Lev Ratnovski

Abstract

The extent to which changes in monetary policy rates lead to changes in loan and deposit rates for households and firms, referred to as ‘pass-through’, is an important ingredient of monetary policy transmission to output and prices. Using data on seven different bank interest rates in 30 European countries, different approaches, and the full sample as well as a subsample of euro area countries, we show that a) the pass-through in the post-pandemic hiking cycle has been heterogenous across countries and types of interest rates; b) the pass-through has generally been weaker and slower, except for rates of non-financial corporation loans and time deposits in euro area countries; c) differences in pass-through over time and across countries for most deposit rates are correlated with financial sector concentration, liquidity, and loan opportunities, and d) the effects of pass-through to outstanding mortgage rates on monetary transmission on prices and output are heterogenous across countries.

Suggested Citation

  • Robert C. M. Beyer & Ms. Ruo Chen & Florian Misch & Claire Li & Ezgi O. Ozturk & Mr. Lev Ratnovski, 2024. "Monetary Policy Pass-Through to Interest Rates: Stylized Facts from 30 European Countries," IMF Working Papers 2024/009, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2024/009
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    Cited by:

    1. Bielskis, Karolis & Lastauskas, Povilas, 2024. "The role of housing market and credit on household consumption dynamics: Evidence from the OECD countries," Journal of Economic Behavior & Organization, Elsevier, vol. 228(C).
    2. Sánchez Serrano, Antonio, 2025. "Banks in an environment of higher interest rates," Latin American Journal of Central Banking (previously Monetaria), Elsevier, vol. 6(4).
    3. Lang, Jan Hannes & Rusnák, Marek & Herbst, Tobias, 2025. "The impact of monetary policy and macroprudential policy on corporate lending rates in the Euro area," Working Paper Series 3057, European Central Bank.
    4. Doojav, Gan-Ochir & Juragat, Arman, 2025. "Nonlinearities and state-dependence in the monetary transmission mechanism: Evidence from a commodity-dependent economy," International Economics, Elsevier, vol. 184(C).
    5. Kārlis Vilerts & Sofia Anyfantaki & Konstantīns Beņkovskis & Sebastian Bredl & Massimo Giovannini & Florian Matthias Horky & Vanessa Kunzmann & Tibor Lalinský & Athanasios Lampousis & Elizaveta Lukman, 2026. "Details Matter: Loan Pricing and Transmission of Monetary Policy in the Euro Area," International Journal of Central Banking, International Journal of Central Banking, vol. 22(2), pages 1-89, April.
    6. Olivier De Jonghe & Konstantīns Beņkovskis & Karolis Bielskis & Diana Bonfim & Margherita Bottero & Tamás Briglevics & Martin Cesnak & Mantas Dirma & Marina Emiris & Pálma Filep-Mosberger & Valentin J, 2026. "Household Borrowing and Monetary Policy Transmission: Post-Pandemic Insights from Nine European Credit Registers," International Journal of Central Banking, International Journal of Central Banking, vol. 22(2), pages 91-194, April.
    7. Julián A. Cárdenas-Cárdenas & Deicy J. Cristiano-Botia & Eliana González-Molano & Carlos Huertas-Campos, 2025. "Colombian Monetary Policy Interest Rate: Its Expectations and the Pass-Through to Interest Rates of CDs and Credit," Borradores de Economia 1327, Banco de la Republica de Colombia.
    8. Ferreira, Vicente & Abreu, Alexandre & Louçã, Francisco, 2025. "The rise and fall of inflation in the Euro Area (2021-2024): A heterodox perspective," Structural Change and Economic Dynamics, Elsevier, vol. 72(C), pages 103-110.
    9. Ivanova, Nadezhda & Popova, Svetlana & Styrin, Konstantin, 2025. "Bank market power and monetary policy transmission: Evidence from loan-level data," Emerging Markets Review, Elsevier, vol. 66(C).

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