Question

In order to support the world economy due to global health crisis major central banks have been lowering the interest rates, increasing government stimulus spending and other fiscal/monetary responses. What can be the major consequences of very low interest rates (easy monetary policy)  in the future?  

Answer 1

There have been a wide cutting of interest rate all across the world by Central Bank in order to stimulate the economy to counter the leck of demand across the global economy.

this low interest rate is not sustainable for the long term as there would be a time where further interest cuts cannot be done as it has already reached the level of zero and hence when the economy would be stable after providing so much of stimulus .

Zero interest rate would also have a long implications on the balance sheet of the Federal Reserve as well as the collection of the government because there would be less collection of interest and taxes and Federal balance sheet will also shrink further as they have to provide bailout packages and there would be lower earnings as well.