Zero Interest Rates

Zero interest rates are a type of financial policy that is used by central banks, which are special organizations that manage the money and banking systems of countries. When a central bank sets a zero interest rate, it means that it is charging zero percent interest on the money that it lends to banks and other financial institutions.

Interest is a fee that is charged on a loan or a credit card balance, and it is usually expressed as a percentage of the amount that is borrowed or owed. For example, if you borrowed $100 from a bank and the bank charged 10% interest, you would have to pay the bank $110 in total (the $100 you borrowed plus the $10 interest).

Zero interest rates are sometimes used during economic downturns or times of financial crisis when the central bank wants to encourage banks and other financial institutions to lend more money to people and businesses. By charging zero interest, the central bank hopes to encourage more borrowing and spending, which can help to stimulate the economy.