Web Trader MT5
When an economy slows down, a central bank may try to make borrowing cheaper. One way to do this is through a zero interest rate policy, commonly called ZIRP.
Under ZIRP, the central bank keeps its main interest rate at or very close to 0%. This rate influences the cost of borrowing across the economy, including some mortgages, business loans, and bank lending.
If the policy rate falls from 3% to 0.1%, banks may also lower some of their own rates. The aim is to encourage borrowing, spending, and investment. Still, ZIRP does not make every loan interest-free, because banks continue to add fees, costs, and charges for risk.
