Lower interest rates should also boost domestic investment and consumption. Lower interest rates make it relatively cheaper for firms to borrow money to finance investment in plants and equipment, research and development, or marketing new lines of products. Lower interest rates tend to promote consumption both by making saving relatively less attractive, and also by freeing up money for consumption by allowing consumers to refinance debt at lower interest rates. This is most notable with mortgages, which can typically be refinanced when interest rates fall. This frees up money from debt payments for other forms of consumption. (While.
