How can rates go negative?
Please see below.
There could be circumstance when rates become negative. Before we answer his question, we need to know what we mean by negative.
One meaning could be a change of direction i.e. if one travels
In such cases, though direction of movement or payment may change but still one mile will remain equivalent to
However, taking another example, assume a seller of eggs sell eggs at a rate of
In fact these days, some central banks have moved or are contemplating to move towards negative rates of interest to revive their economies.
The reason is that they want industrial and commercial units to borrow money from them and in place of paying any interest receive interest. In reality as central banks lend only to banks and the latter add their operational charges, the real cost to individual industrial and commercial units may not be negative, but their cost of borrowing will come down and may be economy would revive.