What conditions must be met for interest rates to remain very low?

The absence of inflation, even at full employment, can allow central banks to keep interest rates very low for a long time. But which conditions must be met for interest rates to remain very low without risk ? If persistently very low interest rates do not lead to renewed inflation, they may give rise to financial imbalances (excessive debt, asset price bubbles, etc.). To prevent this, the use of macroprudential policies (banks’ balance sheet ratios, loan-to-value ratios) must be intensive enough and these policies must be effective; A s interest rates are very low, they cannot be lowered to respond to cyclical growth s lowdown. A more intensive use of fiscal policies must therefore be accepted in the event of a growth slowdown or a recession.