Low and negative interest rates. Overview of policy aims and possible effects

Please note: Each In-Depth Analysis is assigned a DOI (digital object identifier), which is a safe and long term way of ensuring a hyperlink to the full text of this report. However, when ESO creates this record, on occasion the DOI still has not been activated by the EU Bookshop. If you find the source url hyperlink does not work please use the alternative location hyperlink listed as a related url.The current very low/negative interest rate environment is the subject of much debate. On one side, the central banks claim that it is not the cause of the problem but the solution, as it should boost investments and spur growth. On the other, a number of Member States claim that the low rates 'expropriate' savers, and financial intermediaries argue that they are putting their tried and tested business models at risk.

This analysis introduces interest rates, looks at the causes behind their sustained decline and presents the current state of the debate.

Author: Angelos Delivorias

• Primary Source

European Parliament: Directorate-General for Internal Policies of the Union: Publications available via the EU Bookshop http://bookshop.europa.eu/en/directorate-general-for-internal-policies-of-the-union-cbf.cKABstF7wAAAEjwYYY4e5K/

European Parliament: European Parliamentary Research Service: In-Depth Analysis, September 2016: Low and negative interest rates. Overview of policy aims and possible effects http://www.europarl.europa.eu/RegData/etudes/IDAN/2016/589782/EPRS_IDA(2016)589782_EN.pdf

Daily Telegraph, 02.09.16: Why low interest rates are now doing more harm than good http://www.telegraph.co.uk/business/2016/09/02/why-low-interest-rates-are-now-doing-more-harm-than-good/

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