Define: Zero Interest Rate

UK Accounting Glossary

Definition: Zero Interest Rate


Quick Summary of Zero Interest Rate


The monetary policy of maintaining a nominal interest rate of 0%.



What is the dictionary definition of Zero Interest Rate?

Dictionary Definition


This is the monetary policy of a maintaining a nominal interest rate of Zero per cent (0%).

Once a zero interest rate has been achieved it’s not possible to stimulate the economy by reducing the interest rate any further.

This means that other forms of monetary policy, such as qualitative easing (for example), will have to be used instead.

However, in exceptional circumstance, a monetary policy authority may be able to push key interest rates below zero within the short term.


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This glossary post was last updated: 6th May 2019.