Zero interest rate policy

Zero interest rate policy

The zero interest rate policy (ZIRP) is a Keynesian macroeconomics scheme for economies exhibiting slow growth with a very low interest rate, such as contemporary Japan.

Under ZIRP, the central bank maintains a 0% nominal interest rate. The effect of a ZIRP is to encourage investment throughout the economy by making capital purchases more financially attractive. Whether ZIRP succeeds in achieving this goal is a matter of much debate.

See also

* Liquidity trap

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