Much of these savings have been forced, although a considerable part represents precautionary savings. These developments highlight that the strength of monetary policy transmission may depend not only on the interest rate level but also on the state of the economy. [8] This is a particularly important aspect at the current juncture.
Significant and prevailing uncertainty about income prospects may weaken the willingness and ability of firms and households to take full advantage of loose financial conditions. [9] Recent surveys indicate that households continue to plan to save more and not less as a result of the pandemic, despite historically low interest rates (see right chart slide 8).