The Federal Reserve Board recently announced that it was committed to keeping key interest rates near zero until late 2014. This policy is intended to create jobs and stimulate the economy by making borrowing less expensive. When money is cheaper to borrow, it flows more freely.
But the announcement, which surprised some observers, can have many implications, not all of which are immediately clear.
Let’s start with the positives. Keeping money cheap for banks and other institutions does mean it will be easier for them to lend to businesses (more…)