Does cutting interest rates actually help the economy?
The practice of cutting interest rates is something that just about every country has done from time to time. While some people believe that the action of cutting interest rates is always a good thing, that is not necessarily the case. While reducing interest rates can certainly have beneficial effects for some portions of the economy, there is also the potential to damage other sectors. Here are some examples of when cutting interest rates can be helpful and when the action could lead to economic difficulties for a given country. One of the immediate benefits of cutting interest rates is that the action can stimulate consumers to purchase more in the way or property, goods, and services. Because interest rates are lower, the typical consumer perceives some larger purchases to be more affordable, since the purchase will ultimately include a lower amount of financing in the final price. People are more receptive to applying for credit to finance big ticket items such as a home or a new
