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Generally speaking, when interest rates go down, people spend more money because borrowing money is cheap or sometimes even free, like during 2020 and 2021, when the fed dropped interest rates to almost zero percent. On the other hand, this also means that, when interest rates go up, people spend less money, because now you have to pay to play right, it makes sense. If all of a sudden, your credit card didn't charge you anything for borrowing money. You would spend like crazy with inflation, currently at a 40-year high at 7.8 percent.

This is the reason the federal reserve is increasing interest rates in order to slow down and reverse the current rate of inflation. When interest rates rise, people spend less money and inflation eventually goes down. Well, hopefully.

By Stock Chat

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One thought on “Inflation vs interest rates! #shorts”
  1. Avataaar/Circle Created with python_avatars Pepe Epstein says:

    Free money … Money printer go brrrtrrr

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