Negative interest rates as a matter of public policy are impacting as much as a quarter of the world’s population. Central banks, trying to kick start economies and stave off deflation, have turned to this unconventional tool in growing numbers as a means of fiscal stimulus. In a new paper, a cross-section of S&P Global analysts and economists, from S&P Ratings, S&P Global Market Intelligence, and S&P Dow Jones Indices, looks at the phenomenon of negative interest rates and seeks to answer questions about their impact, and whether they are fulfilling the goals established by their implementation.
Central banks’ implementation of negative policy rates is at an unprecedented scale, reflecting both the limits of previous unconventional monetary policies and a general inability to utilize fiscal stimulus to jump start economic growth. However, this extreme policy approach will have consequences, both intended and unintended, for markets, macroeconomic balances, investors, consumers, and policymakers.
We draw on the strength of our deep global analytic bench to provide commentary and insights that investors can harness as they strive to navigate and profit in this unchartered environment.
David Blitzer, Ph.D.
Paul Sheard, Ph.D.
Cristiano Zazzara, Ph.D.