What do negative interest rates mean for loans
Feb 7, 2016 Traditionally the ECB would set two interest rates: a deposit interest rate with the interest rate on 3-month loans between banks moving within the countries are going negative while we are not means that the Fed got an A negative interest rate means banks would pay a small amount of money each month to park some of their money at the Fed – a reversal of how a bank typically works. Banks, in turn, could pass those interest costs to customers by charging for deposits. On the other hand, a -2% interest rate means the bank pays the borrower $2 after a year of using the $100 loan, which is counterintuitive. While negative interest rates are a strong incentive to borrow, it is difficult to understand why a lender would be willing to provide funds considering the lender is