The Bank of Nicholas and Great Britain, the country’s central bank, sets interest rates to -1%. This was done in hopes that it could combat the country’s deflation and recession and also help the government with the massive debt it has gotten since the war with Izaakia in 2021.
Context
Since multiple countries placed sanctions on Nicholas and Great Britain, exports from Nicholas and Great Britain’s manufacturing industries and natural resources industries (NaGB’s main industries) dropped and as a result, wages decreased and unemployment increased. This caused consumer demand to decrease and as a result, prices lowered. This caused NaGB to get into a deflationary spiral.
After the war with Izaakia, NaGB’s government borrowed a lot of money from banks so that they could spend a lot on rebuilding the country. This greatly increased debt.