The current Federal Funds Rate (rate at which Central Banks 🏦lend money to private banks) is 2.4%.
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The average Federal Funds Rate 〰️over the last 60 years has been over 5%.
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In times of recession, Central Banks tend to lower interest rates, making it cheaper to borrow money 💰 to #encourage more #spending and less #saving .Normally they would lower rates 3-6%.
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With current rates at already as low as 2.4% in the #US 🇺🇸 , and a #recession looming, it will be interesting to see how the #FederalReserve handles it when it comes.
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We could even see #negative ➖interest rates. That would mean that not only is your money losing value 📉because of all of the #inflation 💸 that is created due to low rates, but you would actually have to pay #money to keep money in the bank 🏦.⠀⠀⠀⠀⠀⠀
The #biggest issues with this are that it encourages #people to go into debt 💳, and discourages saving. ⠀⠀⠀⠀⠀⠀⠀
Savings are what allow banks to lend money as capital #investment which result in productivity #gains 🌽 and ultimately a higher #standard of living in the long run 🏡.