Hence, we need to tailor our own precautionary solutions, and understand intended and unintended consequences of different monetary policy tools. We are certainly aware that the current low interest rates impact sectors of the economy differently. However, the dominant force to stimulate activity, employment and inflation across the economy as a whole is to bring forward spending and investment.
In terms of distributional impacts, low interest rates support employment opportunities and bolster asset prices and reduce the return on bank deposits. The opposite is true when interest rates are high and the net impact on household balance sheets will depend on the mix of assets they hold.