Houston Chronicle: What Happens to the Interest Rate During a Recession?
Interest rates affect all businesses, large and small, and interest rates typically fall during a recession. There are several reasons for this. One is that the United States Federal Reserve uses its financial tools to nudge the rates down. Theoretically, the basic law of supply and demand also kicks in. Ultimately, it is the consumers and business borrowers who determine how much interest they are willing to pay to borrow money.