> Deflation (or at least reduced inflation) means reduced interest rates.

If it was "just" a slow down, maybe interest rates were lower, but during times of uncertainly lending is risky and so higher return is asked for that risk.

The historical records shows that interest rates spiked during major economic events (of which there were more off, more often, and tended to last longer):

* https://econbrowser.com/archives/2012/02/why_not_abolish

* https://econbrowser.com/archives/2012/09/the_gold_standa_1