The flip side of tightening is easing, where the central bank lowers interest rates.

This makes borrowing cheaper, with the aim of encouraging consumers and businesses to spend more.

While the short-term effects usually include an uptick in stock markets and increased economic activity, the long-term impact could be hazardous.

Easing can lead to the formation of asset bubbles if the market becomes too speculative. It can also result in high inflation if demand outstrips supply.

Recession Signal

Its very important to understand the interest rate LAG on the economy. Things don’t change quickly when interest rates are increased.

Interest rates affect different businesses at different times, depending on when they need to re-finance.

Same with the general population, on things like re-mortgaging out of fixed rate periods. 

People and businesses might have maturity/ re-borrowing terms of 2, 3, 5 10 years.

That debt might not be rolled over for a long time. There will be a huge number of people and businesses who are not able to make use of the cheaper rates.

Nearly always, however, recessions happen after the interest rates have not just stopped rising, but are actually coming down.

Easing usually happens after interest rates are held at a level for enough time for something in the economy to break (usually a bank or two collapses).

Track this yourself

You can track the US interest rate easily on TradingView: https://www.tradingview.com/chart/v7ZG3yMA/?symbol=ECONOMICS%3AUSBP