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About LinkBacksEconomics for dummies here folks!
Is there an established pattern of what happens interest rates during a recession? In an effort to stimulate the economy will they stay low during times such as we're about to go through?
Economics for dummies here folks!
Is there an established pattern of what happens interest rates during a recession? In an effort to stimulate the economy will they stay low during times such as we're about to go through?
As interest rates arent set by the market as they should be, we cant answer the question...
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Interest rates do get cut during a recession.
The plan is lower rates mean cheaper borrowing which should boost spending and therefore boost a struggling economy.
Hope this helps !
It depends.
If inflation is running high while in recession, countries tend to raise interest rates.
If growth is negative and inflation low interest rates tend to be be low.
There is no hard and fast rule. There is much debate worldwide about the correct route to take. Slashing interest rates to try try get the banks lending again is the the current strategy. Expect more cuts from the ECB.
Official rates will tend to be low.
What your bank etc demands from you, if they deem you financially sound is another matter. A lot of their recent losses will have to be recouped.
Mammy, get the hammer there's a fly on daddy's head.
What happens if inflation is high and growth negative, what do they do then?Originally Posted by ballot stuffer
Economic Left/Right: -0.50
Social Libertarian/Authoritarian: -0.77
They probably abandon the currency
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The health of the economy affects interest rates by influencing the supply of, and the demand for, credit.
People’s incomes fall in a recession, so the amount they save also decreases.
The demand for credit by business generally declines in a recession, as business spends less on new buildings, equipment, and inventories. Also, the Federal Reserve acts to reduce interest rates during recessions, in order to stimulate economic activity.
The federal government’s demand for credit generally rises in a recession, as the reduction in business and consumer incomes reduces tax revenues, and programs such as unemployment insurance require increased spending.
The net effect of all of these changes is that interest rates often go down in a recession.
It would appear that the ECB will reduce interest rates over the coming months as deflation takes hold.
Interest rates are set to rise sharply from here.
Depends on where you are.
ECB rates will decline.
UK rates will decline as pretty much guaranteed by Eddie George - Bank of England Govenor last week
US rates will increase but not just yet.
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