What Is a Zero Percent APR?

Zero interest rate means zero interest, and the world is moving towards the zero interest rate era. Interest rate is also called interest rate. The beginning of the era of zero interest rates around the world indicates the ratio of the amount of interest to the principal in a certain period, usually expressed as a percentage. In terms of its expression, it refers to the ratio of the amount of interest to the total amount of borrowed capital during a certain period. The interest rate is the level of interest of a unit currency in a unit of time, indicating how much interest is.

Zero interest rate

Interest rates (Interest Rates)

Interest rate is also called interest rate. Within a certain period

The interest rate determines the amount of interest

According to this model, the decision on interest rates depends on

In an economic sense, in

Various interest rates are classified according to different division methods and angles, so as to clearly indicate the characteristics of different types of interest rates. The term unit for calculating interest rates can be divided into:

Zero interest rates in the U.S.

In order to prevent further economic downturn, the Fed made another amazing move on December 16, 2008. The Fed stated that it would use all available means to deal with the financial crisis and economic recession. Economic outlook is bleak At the end of the day's regular meeting of monetary policy decisions, the Federal Reserve cut interest rates from 1% to a range of zero to 0.25%. This rate cut is larger than the 0.5 percentage point expected by many analysts. The Fed also decided on the same day to reduce the discount rate, which is the interest rate paid by commercial banks to borrow short-term loans from the Federal Reserve Bank, by 0.75 percentage point, from 1.25% to 0.5%. In the statement of interest rate cuts, the Federal Reserve said that since the last regular meeting at the end of October 2008, the labor market situation has deteriorated, consumer spending, corporate investment and industrial production have been declining, financial market conditions are still severe, and credit conditions are still tightening. On the whole, the economic outlook is further bleak. At the same time, inflationary pressures have decreased significantly. Due to lower energy and other commodity prices and a weak economic outlook, the Fed therefore expects inflation to decrease further in the coming quarters. The Fed said the commission would use "all available tools" to promote sustainable economic growth and price stability. Due to the weak economy, interest rates may need to remain at this particularly low level for a period of time. The Fed's future policy focus will be on supporting the normal operation of financial markets and stimulating economic growth through open market operations and other appropriate means. Analysts point out that the Fed's near "desperate desperation" not only shows the determination and courage of the Fed's decision-makers to cope with the crisis, the US economy has fallen into recession in December 2007. Helps boost market confidence The Federal Reserve started this round of interest rate cuts in September 2007, when the interest rate level was 5.25%. In fact, as the space for rate cuts continues to decrease, the Fed has increased its efforts to inject capital into the market. However, a large capital injection may lead to a flood of dollars in the market and cause the dollar to depreciate. Analysts point out that the United States cannot be alone. Improper measures will not only fail to save the US economy, but will also slow down the development of other economies.

Zero interest rate approaches zero rate

On December 17, 2008, the Federal Reserve lowered interest rates to historical lows. In order to prevent further economic downturn, the Federal Reserve decided on December 16, 2008 to lower the federal funds rate, which is the overnight lending rate of commercial banks, to historical lows. 1% down to zero to 0.25%. The US Federal Reserve made another amazing move on the 16th, reducing the federal funds rate, which is the overnight lending rate of commercial banks, from 1% to the lowest point in history-zero to 0.25%. This means that the United States has entered the "zero interest rate" era, and the Fed has almost lost the "traditional means" of using interest rates for macro-control. The Federal Reserve and the US government are facing severe challenges in how to save the recessed US economy. The Fed's near "desperate desperation" not only demonstrates the determination and courage of the Fed's decision-makers to cope with the crisis, but also reflects the severity of the US economic recession. As the financial crisis continues to worsen and spread to the real economy, it is inevitable that the US economy will fall into a deep recession. According to the authority's judgment, the US economy has fallen into recession. Some economists predict that the US economy will contract sharply by 4% to 7% in the fourth quarter of 2008. The Fed stated in its statement on interest rate cuts that since the regular meeting at the end of October 2008, the U.S. employment situation has deteriorated, consumer spending, corporate investment and industrial production have been declining, the financial market situation is still severe, and credit conditions are still tightening. , The economic outlook is further gloomy. " The sharp decline in prices caused by the recession and the ease of inflationary pressures also provided the possibility for the Fed to cut interest rates. Faced with the grim economic situation, the Fed had to resort to the "sandwich" of sharply reducing interest rates. But as the United States enters the era of "zero interest rates," the Fed is also facing the dilemma of exhaustion of regulatory measures. The Fed said the commission would "use all available tools" to avoid a deep recession in the US economy. Therefore, former Federal Reserve official Lawrence Meyer believes that this sharp interest rate cut is likely to be a turning point in the Fed's regulation of the economy's transition from "traditional means" to "non-traditional means". The so-called "non-traditional means" means that in the future, the Fed will give full play to the role of "ultimate borrower" and inject significant capital into the market through innovative financing tools. In other words, the Fed will give full play to the functions of the "money printing machine". In fact, as the space for rate cuts continues to decrease,

The zero interest rate Federal Reserve has increased its efforts to inject capital into the market. The Federal Reserve announced last month that it allocated another $ 800 billion to promote the operation of the credit market, of which $ 600 billion was used to purchase home mortgage bonds and $ 200 billion was used to promote consumer credit. The Fed's balance sheet also swelled rapidly from $ 900 billion to $ 2.2 trillion. In the statement, the Fed also reiterated in a large paragraph the determination to purchase mortgageable bonds and increase capital injections.

However, a large capital injection will exacerbate the Fed's assets and liabilities, and may cause the dollar to flood in the market and cause the dollar to depreciate. The depreciation of the US dollar may be beneficial to the U.S. economy to some extent, but from the perspective of global markets, it is bound to exacerbate the plight of other economies affected by the financial crisis and make other countries lose their confidence in investing in the United States. In the era of globalization, the economies of other countries have fallen sharply, and the United States will never be alone. According to the Fed's decision, the "zero interest rate" policy will be maintained for a period of time. Regarding the Fed's move, American economist Ken Melan believes that US interest rates are already very low, and the psychological effect of falling to a "zero interest rate" will be greater than economic utility, which will help boost market confidence. Encouraged by the interest rate cut, the New York stock market soared that day. However, the Wall Street Journal published an article saying that even considering the Fed's potent medicine, the outlook for the US economy is still "dismal". US President-elect Barack Obama warned that the Fed's "ammunition" to deal with the recession is running out, and he called on other government departments to "stand out" and rush to prevent the Fed family from "death". Obama said the stimulus package is needed now, and he has called his economic advisory board to meet on the same day to discuss countermeasures.

In response to the financial crisis and economic recession, the Fed and the US Treasury have been "jointly fighting." But a series of major measures announced by the Treasury Department failed to effectively curb the economic downturn, which forced the Fed to go all out. As Obama comes to power, it is expected that his "New Deal", which will stimulate investment and consumption on a large scale, will be put into effect, which may form an effective cooperation with the Fed. From the current point of view, the "zero interest rate" era signals that the US economy is at a critical point. If done right, the US economy is expected to gradually get out of it or avoid a longer depression. But if it is not done properly, it will not only save the US economy, but will also slow down the development of other economies in the world. Where to go is not only a test of American policy makers but also a challenge to the world economy.