In part, this reflects the strong explicit conditionality embedded in the ECB’s evolving rate forward guidance statement as well as the interaction with asset purchases and other instruments. [11]  Negative interest rates Within our forward guidance framework, the negative interest rate policy has played a key role in enhancing this automatic stabilisation by lowering the effective lower bound.
There was no playbook to guide the 2014 decision to push the deposit facility rate – which the ECB pays on bank excess reserves – into negative territory. Subsequent cuts, including the latest in September 2019, have brought the deposit facility rate to -0.5 percent.