Is it difficult for monetary policy to be effective when interest rates are very low?

  • Low Interest Rates Bad for Economy

    Low interest rates for borrowing are bad for banks because they don't make as much money on loans. But investors in other areas like low interest rates because they can borrow money for less. It is difficulty to make monetary policy when interest rates are low for consumers. When the fed even breathes about ending the easing of economic policy, Wall Street goes nuts.

  • Yes. Having low interest rate implies a slow economy

    I agree that when the interest rates are low it is difficult for monetary policy to be effective. However, I do not believe it to be the cause of ineffective monetary policy, more like a symptom of a stagnating economy. Interest rates are lowered to stimulate spending, and if the interest remains the same, it means that adjustment did not work stimulating the economy.

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