Question

What is the Impact of Global Financial Crisis on Interest Rate in the United States

Answer 1

During the financial crises , the interest rates in the market fell drastically. The falling rate of interest was a result of depreciating market and falling trust in the market. The condition was so severe that the rate of interest for short term loans fell to zero percent.

The falling rate of interest encouraged lending and ultimately the inflation rate was rising . Higher inflation rates encouraged more borrowing . Although due to falling rates and more borrowing , the money with banks reduced and ultimately the system fell , even though the system tried to recover with rising some rate of interest. But constant inflation and global pressure of falling financial market across the world lead to the downfall and financial crises.