app.title

ZIRP (Zero Interest Rate Policy) era

Event

The period of artificially low interest rates following the 2008 financial crisis. Its end is cited as a primary cause for the current wave of corporate bankruptcies, as companies that survived on cheap capital are now failing.

entitydetail.created_at

8/31/2025, 4:31:54 AM

entitydetail.last_updated

8/31/2025, 5:04:33 AM

entitydetail.research_retrieved

8/31/2025, 4:37:56 AM

Summary

The ZIRP (Zero Interest Rate Policy) era, a macroeconomic concept characterized by central banks maintaining very low nominal interest rates to stimulate growth and combat deflation, has concluded. Its end has led to a significant increase in corporate bankruptcies, reaching levels not seen since 2010, as reported by S&P Global. This trend is viewed as a natural process of creative destruction, driven by factors such as substantial commercial real estate debt and disruptive competition from new business models. Historically, ZIRP was first implemented in Japan in the 1990s and later by the United States during specific periods, including from December 2008 to December 2015 and again from March 2020 to March 2022.

Referenced in 1 Document
Research Data
Extracted Attributes
  • Policy Type

    Unconventional Monetary Policy

  • Primary Goal

    Stimulate economic growth, combat deflation, promote economic recovery

  • First Implemented

    Japan in the 1990s

  • Key Characteristic

    Central bank maintains a 0% nominal interest rate

  • US Implementation Period 1

    December 2008 - December 2015

  • US Implementation Period 2

    March 2020 - March 2022

  • Associated Economic Conditions

    Slow economic growth, deflation, deleverage, liquidity trap

Timeline
  • ZIRP first used in Japan after the Japanese asset price bubble collapsed. (Source: Investopedia)

    1990-01-01

  • ZIRP period begins in the United States. (Source: Wikipedia)

    2008-12-01

  • US Federal Reserve reduced target rate to 0-0.25%, formally initiating a ZIRP period. (Source: Web search results (PDF))

    2008-12-16

  • US Federal Reserve announced it would keep zero rates for 'an extended period'. (Source: Web search results (PDF))

    2009-03-18

  • First ZIRP period in the United States ends. (Source: Wikipedia)

    2015-12-31

  • Second ZIRP period in the United States implemented amid the COVID-19 pandemic. (Source: Wikipedia)

    2020-03-01

  • Second ZIRP period in the United States ends. (Source: Wikipedia)

    2022-03-31

  • Observation of corporate bankruptcies rising to their highest levels since 2010, following the end of the ZIRP era. (Source: Related document)

    2023-01-01

Web Search Results
  • Zero interest-rate policy

    Zero interest-rate policy (ZIRP) is a macroeconomic concept describing conditions with a very low nominal interest rate, such as those in contemporary Japan and in the United States from December 2008 through December 2015 and again from March 2020 until March 2022 amid the COVID-19 pandemic. ZIRP is considered to be an unconventional monetary policy instrument and can be associated with slow economic growth, deflation and deleverage. ZIRP could also describe an interest-free economy. [...] ## Overview Under ZIRP, the central bank maintains a 0% nominal interest rate. The ZIRP is an important milestone in monetary policy because the central bank is typically no longer able to reduce nominal interest rates. ZIRP is very closely related to the problem of a liquidity trap, where nominal interest rates cannot adjust downward at a time when savings exceed investment. [...] (economist)") finds that, in a ZIRP situation, the optimal policy for government is to spend enough in stimulus to cover the entire output gap.

  • What Is Zero Interest-Rate Policy (ZIRP)? How It Works and Goals

    ZIRP was first used in the 1990s after the Japanese asset price bubble collapsed. In response to declines in asset prices, Japan implemented ZIRP as part of its monetary policy during the subsequent 10 years, commonly referred to as the Lost Decade. [...] ZIRP is a method of stimulating growth while keeping interest rates close to zero. The governing central bank can no longer reduce interest rates under this policy, rendering conventional monetary policy ineffective. Unconventional monetary policy such as quantitative easing is used to increase the monetary base as a result. [...] The Bank of Japan employed a zero interest rate policy (ZIRP) to combat deflation and promote economic recovery after two decades of slow growth. Similar policies have been implemented by the United States and the United Kingdom. ### Key Takeaways ## Zero Interest

  • [PDF] The unintended consequences of the zero lower bound policy

    includes two dis- tinct interest rate regimes: A regime in which the rate is higher than zero percent (20 05–20 08) and a regime with zero interest rates (2009–2013). As Fig. 2 indicates, in the first regime, the rate had been gradually going up from 2% at the beginning of 2005 to 5.25% in the middle of 2007 and then subsequently going down to 0–0.25% by the end of 2008. The second regime has been manifested by a con- tinuous zero interest rate policy (the rate has been cut to zero on December [...] long-term part of the yield curve, but the opportunity set of MMFs only spans short-term assets. Second, QE pri- marily entails the purchase of mortgage-backed securities, Table 1 Zero Interest Rate Policy Events (ZIRP). We report the dates of FOMC meetings in which the Fed decided to change the Fed target rate or provided policy guidance about the prevail- ing zero interest rate policy. Date Event December 16, 2008 Fed target rate reduced to 0–0.25% March 18, 2009 Zero rates for “an extended [...] occurred: (1) a change in the interest rates, (2) forward guidance announcement. Table 1 provides a short description of the events in chronological order. The first event date is December 16, 2008, which is the date of the meeting at which the Fed target rate was cut to 0–0.25%, and the other four event dates capture the meetings at which the Fed outlined its forward guidance regarding the duration of the zero-rate regime. Specifically, on March 18, 2009, the Fed announced that it would keep

  • The Bank of Japan

    Let me summarize the major messages of my talk. I think that the ZIRP was a unique experiment in the history of the BOJ not just because the level of the overnight rate was zero but because it involved some commitment about the future course of monetary policy. The effects of the policy on the economy were significant as a result of this commitment to affect expectations of market participants. The commitment was a useful way to address the liquidity crunch aspect of the recession. It also [...] been sometimes called the zero interest rate policy (ZIRP) outside the BOJ. I will use the terminology in this talk. [...] The ZIRP produced significant impacts on money and financial markets and then on the rest of the economy. The yield curve flattened considerably all the way out to 10 years. Rates on instruments with maturities of less than a year were virtually zero during most of 1999. The 10 year JGB rate had been between 1.6 and 2.0 % for the last one and a half years. Stock prices rose sharply in 1999. Differences in yield between corporate and government bonds narrowed substantially. Thus, the ZIRP forced

  • What Fiscal Policy Is Effective at Zero Interest Rates?

    A key assumption is that the model is subject to shocks so that the short-term nominal interest rate is zero. This means that, in the absence of policy interventions, the economy experiences excess deflation and an output contraction. The analysis thus builds on a large recent literature on policy at the zero bound on the short-term nominal interest rates, which is briefly surveyed at the end of the introduction. The results are perhaps somewhat surprising in the light of recent public [...] (22) Under this specification, the government increases spending in response to the deflationary shock and then reverts back to steady state once the shock is over.23 The AD and AS equations can be written as ˆ YL = μˆ YL + σμπL + σre L + (1 −μ) ˆ GN L (23) πL = κ ˆ YL + βμπL −κψσ−1 ˆ GN L . [...] increase the nominal interest rate more than 1 to 1 with inflation, thus causing an output contraction with higher inflation. As a consequence, the real interest rate will decrease with deflationary pressures and expanding output, because any reduction in inflation will be met by a more than proportional change in the nominal interest rate. This, however, is no longer the case at zero interest rates, because interest rates can no longer be cut. This means that the central bank will no longer be