Negative interest rate policy (NIRP)

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Before the financial crisis, zero interest rates were seen as the limit for monetary policy. Not any longer. Zero (or close to zero) interest rate policies, or ZIRPs for short, were put in place by many central banks around the world, in a desperate effort to prevent the global economy falling into a very painful economic depression.

To a degree, the policy, along with more extraordinary forms of monetary policy such as quantitative easing, worked. However, concerns linger that we face a prolonged period of economic stagnation and strong deflationary forces. Consequently, many central banks have now gone below zero. NIRPs, negative interest rate policies, have replaced ZIRPs in an implicit acknowledgement that, if tied to the zero-bound, interest rates cannot go low enough to prompt an uptick in inflation.

Effectively, in a negative interest rate environment, banks have to pay to park their deposits with the central bank and should, in theory, be incentivised to put more funds to work by lending to consumers and businesses. Whether this works in practice or not, remains to be seen…

Woodford Investment Management Ltd is authorised and regulated by the Financial Conduct Authority (firm reference number 745433). Incorporated in England and Wales, company number 10118169. Registered address 9400 Garsington Road, Oxford OX4 2HN.

Woodford Patient Capital Trust plc is incorporated in England and Wales, company number 09405653. Registered as an investment company under section 833 of the Companies Act 2006. Registered address Beaufort House, 51 New North Road, Exeter, EX4 4EP.

The Woodford Funds (Ireland) ICAV (the “Fund”) has appointed as Swiss Representative Oligo Swiss Fund Services SA, Av. Villamont 17, 1005 Lausanne, Switzerland. The Fund’s Swiss paying agent is Neue Helvetische Bank AG. All fund documentation including, Prospectus, Key Investor Information Documents, Instrument of Incorporation and financial reports may be obtained free of charge from the Swiss Representative in Lausanne. The place of performance and jurisdiction for all shares distributed in or from Switzerland is at the registered office of the Swiss Representative. Fund prices can be found at www.fundinfo.com.

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