Low nominal interest rates can hinder economic growth, study finds.
The Friedman rule suggests that when interest rates are very low, it can lead to poor economic performance. This is because people hold too much money instead of investing it in more productive ways. However, having low inflation and interest rates can also be harmful to growth. There is an optimal interest rate that maximizes an economy's growth rate. This means that having too high or too low interest rates can be bad for the economy.