zero-bound interest rate

Definition

The process used in monetary policy by central banks to incrementally reduce the nominal rate of interest until it reaches 0% below which it cannot be lowered. It is typically implemented at a time of declining economic growth as a measure to stimulate economic activity. Such policies have been used recently by Japan in the 1990's and the U.S. in 2009 - 2011 following severe economic downturns.
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zero-beta portfolio zero-bracket amount