Sat, 02 May 2026 22:22:20 +0000

Wait — Unless the Rate is -2.5? No. Understanding What Negative Interest Rates Mean and Why -2.5% Isn’t Possible (Yet) In recent years, discussions around negative interest rates have surged in financial media, policy circles, and public debate. The phrase “Wait — unless the rate is -2.5? No.” captures a critical moment of skepticism: can interest rates truly go below zero, specifically to -2.5%? The short answer is yes, they can in theory, but not in practice—yet. Let’s unpack what this means, why it matters, and why the -2.5% threshold remains a theoretical limit rather than a current reality. ### What Are Negative Interest Rates? Negative interest rates occur when central banks set nominal interest rates below zero. Instead of charging banks for holding reserves, they reimburse banks a small fee—effectively paying them to keep money in the system. This controversial monetary policy aims to stimulate borrowing, spending, and economic growth in low-inflation or deflationary environments.