Negative interest rate policy (NIRP): history and arguments for and against

Abstract

The paper deals with the history and the main pro and con arguments of an unconventional monetary policy used by a central bank or another monetary authority that falls out of line with traditional measures. Until recently, the introduction of negative interest rates was unthinkable in the economic practice. From the point of view of economists, there is no unified opinion on this unconventional monetary policy, and there are different attitudes and policies of central banks. Thus, this paper contains not only arguments for, but also arguments against, and compares the two opposing views on the negative interest rate policy. There is a debate on effective macroeconomic policy instruments and some pitfalls can be observed also at the scientific level.