IMF: Negative rates are effective tools to spur growth

The International Monetary Fund (IMF) said in its latest blog post on Thursday, the negative interest rates policy has been successful in easing financial conditions and thereby, spurring economic growth, which could prompt many central banks to consider negative interest rates "sooner or later”.

Key takeaways

“Experiences so far showed negative rates likely supported growth and inflation.”

“Potential side-effects, such as risks of destabilizing the banking system and disrupting market functions, have "largely failed to materialize.”

"In sum, the evidence so far indicates negative interest rate policies have succeeded in easing financial conditions without raising significant financial stability concerns.”

"Central banks that adopted negative rates may be able to cut them further ... Ultimately, given the low level of the neutral real interest rate, many central banks may be forced to consider negative interest rate policies sooner or later."

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