Low interest Rates, A Boon To The Banks !

Just as there are benefits, there are costs associated with keeping interest rates below their natural level for an extended period. Some argue that an extended period of low interest rates (below the natural rate) is a key contributor to the housing boom and the marked increase in household debt relative to after-tax incomes.
Other costs are associated with very low interest rates. First, low interest rates provide a powerful incentive to spend rather than save. In the short term, this may not matter much, but over a longer period, low interest rates penalize savers and our pensioners that rely heavily on interest income.
Those desiring higher nominal rates might be tempted to seek more speculative, higher-yielding investments, such as property, fueling the property boom.
The keeping interest rates low for an “extended period” may lead to a Japanese-style deflationary economy.

Our Government needs to show some bravery, and start increasing interest rate, slowly.

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