When central banks allow interest rates to approach, or fall below, what is quaintly termed “the zero lower bound” there are clear losers. Banks are presuming that households, obedient to monetary policy theory, will borrow more money at still lower rates. In fact, the reality is that “lower for longer” prevents a robust recovery because it makes economic inequality worse.
This is especially true in the US. Many American households are already living hand-to-mouth, with more debt than they will ever be able to repay. All lower interest rates do is make it harder for those who might be able to save a little to get a healthy return that might provide financial resilience today and a secure retirement in the longer term.
Low interest rates are tough on vulnerable households; negative rates are brutal. The simple mathematics of what happens to a small savings account shows why post-crisis monetary policy has made inequality so much worse.