BIS says negative interest rates working just fine

Frankfurt

NEGATIVE interest-rate policies currently in use by central banks around the world have worked through their respective systems in much the same way as positive rates, though it's not known how far below zero that would continue to be the case, the Bank for International Settlements said.

In its quarterly report published on Sunday, the Basel-based "central bank for central banks" said that "so far, zero has not proved to be a technically binding lower limit for central bank policy rates". "Nonetheless, there is great uncertainty about the behaviour of individuals and institutions if rates were to decline further into negative territory or remain negative for a prolonged period," it said. "It is unknown whether the transmission mechanisms will continue to operate as in the past and not be subject to 'tipping points'…