It will be possible to return progressively to firms’ sharing the costs of these instruments. When calibrating these measures, it will be important to consider the particular conditions of the various sectors of the economy. Measures to support firms’ liquidity will have to be gradually readjusted to prevent a credit squeeze as the economy begins to pick up again.
It is often difficult to find a significant empirical relationship between interest rates and business investment. For a discussion of how businesses respond to changes in interest rates see Lane K and T Rosewall (2015), ‘Firms’ Investment Decisions and Interest Rates’, RBA Bulletin, June, forthcoming.