How low with Euro Interest rates go?

It is a balancing act. Yes interest rates need to be low to help stimulate lending and consumption.

However if interest rates are too low for too long, inflation could be the outcome.

If interest rates are too high, this could lead to a continued freeze in the credit markets.

If interest rates are kept artificially too low for too long, then this is simply proping up what ever is left of a consumption bubble.

If they are too high, it would be too big a shock and serve as an effective death sentence on businesses and consumers.
 


I never said we should raise the interest rates. We should let the rates probably stay at the same level. Incidentally both the British and Americans are printing money. This 'extra' money will dilute the existing money supply and eventually lead to unbelievable higher rates of inflation coupled with even higher interest rates. You've been warned. *Gulp*.
 

And Europe will be doing it before long. I agree that high inflation seems inevitable for no other reason than Governments will have massive debts to pay off by the end of this cycle and although they will deny it, as long as it doesn't turn into a bushfire, they will welcome it.

We are in completely unchartered water here. Nobody has ever really attempted what the UK has attempted this week and I know people have tried comparing it to Zimbabwe and pre war Germany but that's a pointless attempt at headline grabbing. Its all fun and games though!
 
Bronte said:
I wonder when they will start to pay us to borrow?
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If you can lock in interest rates at a fixed rate over a medium to long term and if the level of inflation is higher, then you are effectively paid to borrow.

 
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