Pushing the policy rate below zero may have the opposite effect to that which central banks intend, according to recently published research.

The working paper, by Gauti Eggertson, Ragnar Juelsrud, Larry Summers and Ella Getz Wold, finds a policy rate cut below zero has little impact on deposit rates, and may even lead commercial banks to increase their lending rates.

Drawing on data for Sweden, the authors find Swedish banks that rely more heavily on deposit funding have lower credit growth