The Economic Perspective: “Evaluating Negative Interest Rates”

I’m Mary Walden, with economist MW, welcoming you to the economic perspective.   Today’s program looks at evaluating negative interest rates.  Mike, several countries in Europe have tried to stimulate their economies by allowing for negative interest rates.  What are negative interest rates, and do they work?

Mike:  Summary Answer

  • Depositors pay to save money, rather than are paid
  • Idea is to motivate spending to pump up the economy
  • Monetary authorities recently issued a report on negative interest rates
  • Said they worked – caused added economic growth
  • Also helped banks
  • And improved confidence in the economy – those in financial system realized government was serious about stimulating the economy
  • Will happen in US – monetary authorities have said no!
  • I’m MW

Mary:  And I’m Mary Walden for the Economic Perspective, an NC State Extension program from the Department of Agricultural and Resource Economics.