The danger of keeping interest rates so low is that there won’t be any room to drop them in the face of the next recession.
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Recessions are caused by the Fed manipulating rates too high, as they are now.
By too high, I mean rates that are higher than what the market would charge.
A recession in the U.S. is generally defined as two consecutive quarters of declining GDP. And GDP generally declines for one or both of the following reasons: (1) population declines, and/or (2) productivity declines.
Over the last 20+ years, we have seen weak growth in this country for one reason related to Item (2) above: Our overall productivity has declined as we have had more retirees and generally unemployable people living in this country.
Interest rate reductions aren't going to do anything to change these things. What they ARE going to do is make it easier for people who ARE productive to borrow more money to keep their standard-of-living treadmill going.