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How does raising interest rates control inflation?



When central banks raise interest rates, the impact is felt far and wide. Mortgages become more expensive, house prices might fall and unemployment can rise. So why do central banks do it? This film tells you why.

00:00 – Why should you care about rising interest rates?
00:45 – What are interest rates?
01:36 – What do central banks do?
02:14 – Why do central banks raise interest rates?
03:12 – How do raised interest rates affect consumers?
04:30 – How do raised interest rates affect businesses?
05:20 – What are the risks of raising interest rates?
06:05 – How do interest rates affect inflation?

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Watch our video on whether higher inflation is a cause for concern:

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Is Turkish President Erdogan’s monetary policy as mad as it seems?

Why are investors worried about recession in America?

Do the poor face higher inflation?

Has the Federal Reserve made a mistake on inflation?

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48 comments
@ShonMcallister

Glad to see you using these indicators. They’ve been very effective for my trading

@georgiychernov1618

Wow, Emma, your videos are always so insightful!

@BillieCooper-b5m

Я тоже люблю Pocket Option! Интерфейс очень удобный

@raymond-i2v

The FED knows. They aren't committed to attacking inflation. They are going to continue to inflate, stocks and commodities will continue to go up with everything else. You can't just sit on cash waiting for a crash, get your money working for you, start buying in slowly and then gradually increase the pace of buying as the prices continue to drop

@tatianastarcic

My biggest concern, given the current inflation rate, is how to grow my $300k reserve, which has been sitting stagnant for a long time with minimal gains. I understand the long-term strategy, but with inflation eroding my savings and my portfolio losing value daily, I need to find a solution quickly.

@DonaldMark-ne7se

Honestly, this situation makes me feel uneasy, particularly with the Fed's decision to cut interest rates by 50 bps. It indicates deeper economic concerns, and I'm uncertain about my $130K investment strategy, especially with the possibility of not just a recession but potentially a depression.