«It is clear that the zero
nominal interest rate bound has proven costly,» he wrote.
Not exact matches
There is a growing sense that the world is demand short — that the real
interest rates necessary to equate investment and saving at full employment are very low and may be often unattainable given the
bounds on
nominal interest rate reductions.
Although it now seems that the «zero lower
bound» for
nominal interest rates wasn't actually zero, it is not clear that the recent negative
rates implemented by a handful of central banks in Europe offer some new vista of policy effectiveness.
If she had added: «Plus, even though we are currently above the Effective Lower
Bound on
nominal interest rates (which is probably below 0 %) we are worried that the margin of safety is getting a bit small, and are pleased that fiscal policy is making that margin of safety a bit bigger than it otherwise would be» that would also be an internally consistent thing for the Bank of Canada to say.
As the Swiss National Bank demonstrated in December 2014 when the institution lowered its deposit
rate to − 0.25 %, the cost of storing cash is the actual lower
bound for
nominal interest rates.
In today's Zero Lower
Bound world, central banks have effectively set
nominal interest rates as very close to nothing.