Research: Are central banks giving up on negative rates?

The global debate concerning negative rates has changed over the past year as scepticism has grown about the benefits of very low policy rates. Many central banks are reviewing their frameworks, studying the challenges brought on by the new normal of lower natural rates.

The debate around monetary policy has become more diversified than before. One hot topic this year has for example been “the reversal interest rate”, when intended stimulative effects of monetary policy reverse and become contractionary.

The risks associated with very low rates rates being perceived as a permanent situation, have been stressed by financial watchdogs in the Euro area and in Sweden.

Against this background, our economists have taken a deep dive into the topic of negative interest rates, using Sweden, Denmark, the euro zone, Switzerland and Japan as examples. They have looked at what effects they have yielded and seek to understand if below-zero rates have a place in the central banks’ toolboxes going forward.

Read more and download the report.

Or listen to  Chief Analyst Torbjörn Isaksson, Analyst Inge Klaver and Chief Analyst Jan Størup Nielsen when they discuss their findings in a new podcast  by Nordea Markets Insights Global.