Negative interest rates are, as the name suggests,
inflationinterest rates that are negative. Typically, a bank gives you
interest on all your deposits or savings. So you get a reward, so to
speak, for depositing your money with the bank. In recent years,
however, interest rates have been reduced and turned into the
opposite – if your money is stored at a bank, you now have to pay
money to the bank in the form of negative interest rates.
Negative interest rates are a consequence of the restrictive monetary policy of the European Central Bank (ECB), which aims to ensure price stability. Due to high inflation, the ECB tries to keep the key interest rate low to discourage banks from depositing money with the ECB and instead encourage them to lend. The purpose of lending is to encourage companies to invest more, which in turn creates jobs and economic growth.
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