Part 6/9:
While falling interest rates inject liquidity into the economy, certain sectors like banking may face short-term pressures. Banks' profit margins can be squeezed because the difference between their deposit interest rates and lending rates narrows. Deposits often have fixed terms, while lending rates adjust more immediately, potentially harming short-term profitability.
Insurance companies may also face challenges as lower yields make it harder to generate sufficient returns to meet future liabilities. Consequently, their valuations could come under pressure during prolonged low-rate environments.