Five Years of Negative Rates in Europe and It’s Far from Being Over!

Faced with increased risk on global economic growth, several central banks started easing their monetary policies over the summer, or are thinking of doing so soon. The European Central Bank (ECB) is one of them, having opened the door to restart its asset purchases and to further interest rate decreases. However, interest rates are already particularly low in Europe, with several of them in negative territory since 2014. Even though it is aimed at supporting economic growth and bringing inflation closer to target, there are major issues about the potential negative effects of keeping interest rates too low for too long. This could lead to imbalances that could harm the economy or reduce the effectiveness of monetary policy.