What is the ralationship between inflation and interest rate
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6 replies
jalila-pundogar
over 3 years ago
Inflation and interest rates frequently follow one other as they rise and fall, moving in the same general direction. The relationship reflects the fundamentals of supply and demand. Interest rates drop as inflation does. As borrowing money becomes more affordable, more money is moving about in the economy.
ly-le-mai
over 3 years ago
Inflation and interest rates tend to move in the same direction, with one often chasing the other as they rise and fall. The relationship mirrors basic supply and demand principles. As inflation falls, so do interest rates. It becomes less expensive to borrow money, thus there's more money circulating in the economy.
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