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- ABN AMRO: ECB negative rates are positive for the economy
ABN AMRO: ECB negative rates are positive for the economy
Analysts at ABN AMRO note that some commentators have made the case for the ECB to move the deposit rate to zero based on the view that negative rates are bad for banks and hence counterproductive.
“We think these calls are unjustified and expect the ECB to keep interest rates negative for the foreseeable future. We find that the overall impact on the banking system of negative rate policy – which has been reinforced by other policy measures – has been clearly positive so far. Since the deposit rate was cut into negative territory, bank lending has expanded, lending standards have eased and bank profits have improved. Crucially, lower interest rates have supported economic growth more generally, helping to increase bank loan demand and lower provisions for the banking sector.”
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