Contrary to popular belief, central banks of the country are not a private institution and are directly regulated by the government. In times of recession or similar crisis, the government will lower the interest rate so as to encourage borrowings from the consumers and firms, which will in turn result in an increase in consumer's expenditure and investment expenditure by firms. This results in an increase in the GDP as both are components of it.
The commercial banks should have a lower than usual interest rates when the central bank sets the interest rates lower. There's a difference between what a central bank and a commercial bank.
Tl;dr: Central Banks do not have to necessarily make a profit. They have to sometimes align with the policies enacted by the government as a stopgap to further deterioration of the economy.
The commercial banks should have a lower than usual interest rates when the central bank sets the interest rates lower. There's a difference between what a central bank and a commercial bank.
Tl;dr: Central Banks do not have to necessarily make a profit. They have to sometimes align with the policies enacted by the government as a stopgap to further deterioration of the economy.
