We are taught that lowering interest rates is done to stimulate the economy. Unfortunately, this is counter to how things actually work.
In this video I discuss how interest rates affect capital flow. This is why monetary policy is more propaganda than anything else.
▶️ 3Speak
While I do agree that the interest rates are lowered when the economy is bad, and a lot of people are scared of borrowing because of that. I do think that for others, this can be very helpful. If they have a stable job and need to buy a car or a house, this is perfect time to do so. And this might be the target of the lower interest rates. Give an opening for the upper/middle class to buy things.
If lowering interest rate doesn't affect the economy or stimulate the economy, how then could the economy be stimulated?
I thought that when the interest rate is lowered most investments will come in thereby stimulating the economy.