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Low interest rates, which may fail to encourage consumer spending in the event that there is confidence in the economy of the tiny. Little do they might not be able to increase their spending if their jobs are at risk due to economic slowdown. -The liquidity trap, banks are not willing to increase their lending during the recession and businesses may not be able to invest in new facilities for operations expansion, because the confidence level in the economy. Time frame: the impact of the decision on the policy, the reduction of the interest rate may take as long as a year or more to be felt and has a significant impact on the recession. The interest rate may have more impact in some sector of the economy more than any other sector. The reduction of the interest rate will reduce the rate of mortgage payments, thereby increasing their disposable income but lower revenues, leaving people with savings. Changes in interest rates affect the exchange rate index.It is difficult to use the financial instruments are interest rate alone to control the economic variables that are available in bulk. The two lower interest rates did not stimulate consumer spending came out always. If they don't have confidence in the economy is, and there may be a risk of an economic slowdown, which affect the liquidity and the release of the Bank's loan is three times the length of the fence because of policy decisions and the reduction of the interest rate may be required from time to time, which can affect long-term economic recession reduced the interest rate of the four might affect certain sectors of the economy. In the last section. Index of Exchange affected by interest rate changes.
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