Can Ireland rely on super-low interest rates to manage Covid-19 debt?
Smart Money: The future of interest rates is the biggest economic question in decades
The vital factor which has allowed countries to spend, without worrying about immediate problems on the markets, is rock bottom interest rates combined with massive Central Bank support. Photograph: iStock
Some eminent economists have criticised the massive $1.9 trillion budget stimulus planned by the Biden administration. Photograph: EPA
Interest rates at, or below, zero and massive monetary expansion by central banks is helping the Republic and other countries to meet the cost of the pandemic. But how long will this last? Is it back to austerity to pay for the pandemic or on to a future boosted by cheap money?
Introducing an Irish Fiscal Advisory Council conference on the topic this week, chairman Sebastian Barnes said that the central question for budget policy is how to make sense of today’s very high national debt levels and very low interest rates. This may generate, he said “the biggest questions macroeconomics had faced in decades with major implications for fiscal, monetary and financial policies.”