Monday, May 27th 2019

Question

What happens to interest rates in a recession?

Interesting Question?   (7)   (12)



Answers (2)

29th Nov 2009 by cocacolabuffet

Interest rates are usually lower in a recession for mainly a couple of reasons. First, in order to stimulate the economy, central banks usually adopt expansionary monetary policies to the interest rate. Second, businesses and individuals are usually reluctant to borrow as much due to risk aversion and lack of expansion opportunities. Lower demand for loanable funds leads to lower interest rates.

Like This Answer?   (3)   (0)
This answer is the subjective opinion of the writer and not of FinancialAdvisory.com
5th Nov 2009 by Gary

While there is no set answer to this, the usual experience is for interest rates to go down in hopes business will take out loans in order to expand and grow their business, thus creating more jobs. Normally the central banks of a country will set interest rates low in order to generate this activity, like they are in the current recession.

Like This Answer?   (1)   (0)
This answer is the subjective opinion of the writer and not of FinancialAdvisory.com



5th Nov 2009 In Investing 2 Answers | 5372 Views
Subjects: interest rates, recession interest rates,

Answer This Question / Give Your Opinion
What happens to interest rates in a recession?


Answer: *

What country is this answer relevent to? *
Your Name: *

Enter Verification Number: *


Give Your Opinion
Where is Australia and New Zealand Banking Group Head Office?
Share a simple answer to help inform others:
Specific to any country?
First name / Alias

• Your answer will be posted here:
Where is Australia and New Zealand Banking Group Head Office?
Unanswered Questions in Investing
What are convertible securities?
What is a NRI Deposit?
What are RESPs?
What are the different types of Money Market Securities?
Why invest in wines?

Answered Questions in Investing
What is a feeder fund?
What are Corporate partnership transactions?
What are distressed investments?
What are institutional investors?
What is a follow on offering?
Ask A Question
Get opinions on what you want to know:
Specific to any country?