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Effect of Interest Rate Raise on Economic Growth
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Finance and Investing

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Adam Sheikh, Kenya

Effect of Interest Rate Raise on Economic Growth

How far can a increase/decrease in interest rate contribute to the global economic growth?
 

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3
venkataramanan
Financial Consultant, United States
 

Consequences of an Interest Rate Raise / Cut on Economic Growth

An increase in interest leads to an increase / mobilization of savings( i.e., capital formation).
If interest rates are not so attractive, more money will be invested, resulting in an increase in production → more goods → more employment → economic growth.

 
2
Onyango Lucius
Events Marketer, Uganda
 

Effects of Interest Rate Raise on Economy

The problem with raising the interest rate is that the economy will hold on to their money instead of investing it.
Investors may even wait for another raise in the interest rate which might take a long period. This will affect the economic growth negatively.

 
2
Jaap de Jonge
Editor, Netherlands
 

Effect of Interest Rate Raise on Economic Recovery/Growth

I agree a raise of the interest rate normally has a negative effect on the economy, slowing down growth. Because it makes it relatively more interesting for people who have money to put it on some savings account (bank) instead of investing it (in shares/stock). Investments in shares then allow companies to invest and grow, which then stimulates the economy.
@Onyango Lucius I agree that certain investors may even anticipate further future interest rates increases, so they would keep their money at hand in case that happens.

 
2
sanjeeb mohanty
Student (MBA), India
 

Relation Between Interest Rate and Economic Growth

When there is an interest rate increase, there will also be a consequential rise in the prime lendin... Sign up

 

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top
More on Finance and Investing:
Methods, Models and Theories
Discussion Topics
topic Distress Restructuring
topic How to restore Trust in Financial Markets?
topic New Global Reserve Currency needed?
topic List of Investment Mantras
topic Know your Customer (KYC)
topic Never Waste a Good Crisis as Investor
👀Effect of Interest Rate Raise on Economic Growth
topic Alternative Investments
topic Minority Shares Buyback
topic The Equity Method in Accounting
topic The Preliminary Expenses in Balance Sheet
topic Cryptocurrencies - Characteristics, PROs and CONs
topic Foreign Investment Guarantees
🔥 Financial Management - Definition and Aspects
topic Investing by Business Firms
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