ZIRP
Zero Interest Rate Policy (ZIRP) is a monetary policy stance in which a central bank sets its policy rate at or near zero, with the aim of stimulating aggregate demand and guiding inflation toward a target when conventional rate cuts are exhausted. By keeping very low policy rates, borrowing costs for households and firms decline, supporting consumption, investment, and economic activity.
In practice, ZIRP is often accompanied by other unconventional measures such as asset purchases (quantitative easing)
History and usage: ZIRP first became prominent in Japan during the 1990s as a response to prolonged
Effects and critique: Benefits include lower borrowing costs, support for spending and investment, and help in
Exit and normalization: When growth and inflation strengthen, central banks may gradually tighten policy, reduce asset