<p>Decreasing the nominal interest rate to a negative value will cause businesses to have to raise their prices in order to maintain 0 economic profit. This is because wages are "sticky," and cannot change in a general quarterly or annual period.  People who live in the country have not been given any higher incentive to spend, but since prices are increased - aggregate demand will decrease.  Additionally, in order to survive the cut in demand and rise in prices, firms will look to lay off workers - raising unemployment.  Consumption should decrease as a result of a negative interest rate charged by the Central Bank.  In what was an attempt to increase GDP - output will decrease.  --> Stagflation is likely to occur</p>

CC BY-SA 3.0
2016-04-14T16:14:48.423Z
the question is about corporate debt, I now realize how unclear that is in my original post
CQM
CC BY-SA 3.0
2016-04-14T07:34:36.880Z
2016-04-14T07:34:36.880Z
Connor
<p>I was attempt to describe the ramifications of negative interest rates across benchmarks.</p>

<p>I can foresee the business practice changes amongst holders of government bonds, savings accounts, certificates of deposit and mortgages. My conclusion was a possible stall of lending in those markets, but thats a red herring to my real question. When it comes to corporate debt I wasn't so sure what ramification even lower interest rates would have on the attractiveness of investment grade corporate debt.</p>

<p>Is there anywhere I can read prevailing or new theories about that?</p>

<interest-rate><government-debt><corporate-finance><bonds>
negative interest rate lending ripple effects
CQM
# negative interest rate lending ripple effects

(Asked by: username_0 on 2015-10-23)

I was attempt to describe the ramifications of negative interest rates across benchmarks.

I can foresee the business practice changes amongst holders of government bonds, savings accounts, certificates of deposit and mortgages. My conclusion was a possible stall of lending in those markets, but thats a red herring to my real question. When it comes to corporate debt I wasn't so sure what ramification even lower interest rates would have on the attractiveness of investment grade corporate debt.

Is there anywhere I can read prevailing or new theories about that?

**Tags:** interest-rate, government-debt, corporate-finance, bonds

---

## 1 answers

### Answer by username_1 on 2016-04-14. Score: -1

Decreasing the nominal interest rate to a negative value will cause businesses to have to raise their prices in order to maintain 0 economic profit. This is because wages are "sticky," and cannot change in a general quarterly or annual period. People who live in the country have not been given any higher incentive to spend, but since prices are increased - aggregate demand will decrease. Additionally, in order to survive the cut in demand and rise in prices, firms will look to lay off workers - raising unemployment. Consumption should decrease as a result of a negative interest rate charged by the Central Bank. In what was an attempt to increase GDP - output will decrease. --> Stagflation is likely to occur

> **Comments:**
> **username_0**: the question is about corporate debt, I now realize how unclear that is in my original post  

---

