However, if the economy is not in that predicament, cutting rates to a very low level, even to zero, just to insure against the worst case scenario can have deleterious effects in both the short and long term. 6. Conclusions  To conclude, I have analysed today three questions that policy-makers have been pondering in recent months.
The answers can be summarised as follows: first, start cutting rates when you see growth slowing down but not before inflation expectations abate towards the objective of price stability; second, cut rates quickly, but within a credible monetary policy framework; third, be careful to avoid overshooting and cutting interest rates to too low levels.