Positive pass-through from negative rates

Analysis - April 2020 - No. 5

Authors Spange, Morten; Adolfsen, Jakob
Subject Monetary policy; Interest and exchange rates; Rate of interest on certificates of deposit; Monetary-policy transmission
Type Analysis
Year 2020
Published 3 April 2020
Monetary policy interest rates are negative in a number of countries, including Denmark. Concern has been expressed that negative rates may, in some cases, have had undesirable effects on bank lending rates. In Denmark, pass-through to bank lending rates remains positive, and there are no indications to suggest that negative rates have weakened bank lending. The pass-through of monetary policy interest rates to bank lending rates slowed around the financial crisis, driven primarily by the banks with the highest risk exposure before the crisis.