Euro-Area Firms Now Face Negative Interest Rate for New Deposits
Euro-Area Firms Now Face Negative Interest Rate for New Deposits
(Bloomberg) --
Euro-area corporations are facing negative interest rates for new deposits for the first time, threatening to amplify criticism that the side effects of the European Central Bank’s policies could hurt the economy.
The composite interest rate for new deposits fell to minus 0.02% in August, down 9 basis points from the previous month, according to ECB data released Wednesday. A similar gauge for households was broadly unchanged at 0.33%.
The ECB cut its deposit rate for banks to minus 0.5% last month, part of a broader monetary-stimulus package to fuel inflation and bolster economic activity by driving demands for loans. Even before the move, which came with an attempt to mitigate some of its consequences, negative rates were under scrutiny because of banks’ complaints that the measure crimped profitability and could hurt lending.
The August decline in deposit rates for euro-area firms signals lenders are now going a step further into passing on the costs of negative rates.
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To contact the reporter on this story: Yuko Takeo in Frankfurt at ytakeo2@bloomberg.net
To contact the editors responsible for this story: Paul Gordon at pgordon6@bloomberg.net, Jana Randow, Fergal O'Brien
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