Not at all. Let me illustrate with a 1% cut as an example....

Not at all.

Let me illustrate with a 1% cut as an example.



Currently:
1% cut means borrowers get the cut and get to either spend it or use it to pay more off their loan.

Savers on the other hand get a 1% cut to the interest they earn so they are poorer the same amount the borrowers are better off.

The saver can either spend the interest income or save it.


It's zero sum. What the borrowers gain the savers lose.


Split system:
0.5% cut to borrowers means they have the cut to spend or put into the loan.

0.5% additional interest to savers means they have a bonus to spend or save.


Borrowers mostly use their cut to put into the loan thus extinguishing debt and reducing the effective money suppy through fractional reserve banking.

Savers if they spend stimulate the economy and if they save multiply the money supply via frb.


Giving it all to borrowers penalises the savers. It's all one sided. How does splitting the benefit defeat the purpose of a rate cut?