👨‍🎓 How low interest rates affect the economy

**16/52** Macro Mornings Education

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👨‍🎓 This is part of a 52-week series on macroeconomics designed to build your knowledge step by step. Feel free to catch up on previous emails here if you'd like to start from the beginning!

Dear all,

In our last email, we discussed what happens when interest rates rise. Today, let’s explore the opposite scenario - low interest rates - and how they affect the economy and your finances.

Low interest rates are a common tool used by central banks to stimulate economic growth, especially during periods of economic downturns or recessions. Here’s how they work and what they mean for you:

1.     Cheaper Borrowing Costs: One of the most immediate benefits of low interest rates is that borrowing becomes cheaper. Whether you’re taking out a mortgage, a car loan, or using a credit card, lower rates mean you’ll pay less in interest over time. This encourages both consumers and businesses to borrow and spend, which can help boost economic activity.

For example, i…