Low benchmark rate and cheap credit

• Autor: Pilco Flores, Cesar Tirso
• Formato: artículo
• Fecha de Publicación: 2020
• Institución: Universidad Nacional Jorge Basadre Grohmann
• Repositorio: Revistas - Universidad Nacional Jorge Basadre Grohmann
• Lenguaje: español
• OAI Identifier: oai:revistas.unjbg.edu.pe:article/907
• Enlace del recurso: https://revistas.unjbg.edu.pe/index.php/eyn/article/view/907
• Nivel de acceso: acceso abierto
• Materia: Economía; inversión; tasa de referencia de interés; economy; investment; interest reference rate

The objective of the research is to highlight the importance of benchmark interest rate in the interbank market as a fundamental variable, which has an incidence in the level of investments in an economy; consequently, it would have a positive impact on the level of employment. The method used for the present investigation is the documentary review of the panel of the benchmark interest rates shown by several central banks in the world. As a result of this investigation, it is obtained that the monetary authorities, in several countries, manage the benchmark interest rate in times of crisis to encourage the dynamics of economic activity, especially the investment that companies could make in these circumstances. It is concluded that the benchmark rate or the benchmark interest rate is the main monetary policy instrument that most central reserve banks have. If the benchmark rate decreases, this would make the bank ABC lend money to the bank XYZ at a lower cost and as a the lowest rate will be an incentive for banks to lend to each other; and this "cheaper" money is placed via bank loans boosting entrepreneurship, business, and the economy.