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Interest rate pass-through in the euro area: After two decades of crises, a return to normality?

Author

Listed:
  • Natalia Andries

    (ERUDITE - Equipe de Recherche sur l’Utilisation des Données Individuelles en lien avec la Théorie Economique - UPEC UP12 - Université Paris-Est Créteil Val-de-Marne - Paris 12 - Université Gustave Eiffel)

  • Steve Billon

    (LARGE - Laboratoire de Recherche en Gestion et Economie - UNISTRA - Université de Strasbourg)

  • Nicolas Rautureau

    (LEMNA - Laboratoire d'économie et de management de Nantes Atlantique - Nantes Univ - IAE Nantes - Nantes Université - Institut d'Administration des Entreprises - Nantes - Nantes Université - pôle Sociétés - Nantes Univ - Nantes Université)

Abstract

div>This paper investigates the monetary policy transmission in the euro area countries over two decades of single currency. This period was marked by financial, sovereign debt and health crises, as well as by episodes of low and high inflation rates. To face these challenges, the European Central Bank used both conventional and unconventional monetary policy measures of an unprecedented scale. We study whether, and if so to what extent, these different events have affected the transmission of monetary policy to retail bank interest rates in several euro area countries. Our results confirm previous findings, namely that interest rate passthrough has been influenced by the various crises that occurred over the course of the euro area existence. After the pandemic, however, we observe a return to a near complete transmission of monetary policy impulses to lending rates, likely under the effect of a reduction in excess liquidity.

Suggested Citation

  • Natalia Andries & Steve Billon & Nicolas Rautureau, 2025. "Interest rate pass-through in the euro area: After two decades of crises, a return to normality?," Working Papers hal-05029134, HAL.
    • Handle: RePEc:hal:wpaper:hal-05029134
    Note: View the original document on HAL open archive server: https://hal.science/hal-05029134v1
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