Following the global financial crisis, slow global growth and low inflation have prompted a number of central banks to implement a negative interest rate policy (NIRP). Several central banks across Europe and Japan are charging banks a negative interest rate on excess deposits for the first time ever. We believe the analysis of NIRP is best approached with the following three questions:
- Have negative headlines led to overly pessimistic market sentiment?
- What are some of the unintended consequences that may occur?
- Have negative interest rates been successful thus far in boosting growth and inflation?