How does Raising Interest rates control inflation ?
Namashkar Friends, Today we are going to talk about interest rates and Why Central banks around the globe are raising interest rates to control inflation.?
00:00 - Why should you care about rising interest rates?
00:57 - What are interest rates?
01:20 - What do central banks do?
01:40 - Why do central banks raise interest rates?
02:27 - How do raised interest rates affect consumers?
02:55 - How do raised interest rates affect businesses?
03:08 - What are the risks of raising interest rates?
03:24 - How do interest rates affect inflation?
How does it help to bring down inflation?
Inflation measures the annual increase in average consumer prices for a basket of goods and services. Prices typically rise when either supply is constrained, or demand outstrips supply.
Higher rates make borrowing more expensive and encourage saving. When debt is costlier, this in turn can influence consumer demand for goods and services, as well as business investment and hiring intensions. This can help to cool inflation when demand is outstripping supply.
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