Publication - Low interest rates and households’ net interest income
The ECB’s accommodative monetary policy stance has substantially lowered borrowing costs for firms and households, while also lowering the returns on savings. As households do not only borrow, but also save, this raises the question about the extent to which lower interest rates have affected households’ net interest income.
This is particularly relevant when assessing the impact of lower interest rates on aggregate consumption.
Households’ interest earnings have decreased by 3.2 percentage points as a share of disposable income since autumn 2008. Chart A shows the evolution of household income from holding interest-bearing assets such as deposits, bonds and loans.1 However, this excludes the effect of lower interest rates on households’ income and wealth via the investments of pension funds and life insurance providers, and the capital gains on long-term bonds and equities.
page source http://www.ecb.europa.eu/
