top button
Flag Notify
Connect to us
    Facebook Login
    Site Registration Why to Join

Facebook Login
Site Registration
Print Preview

What is the relation of inflation and interest rate?

+2 votes
19 views
posted Mar 3, 2015 by anonymous

Share this question
Facebook Share Button Twitter Share Button Google+ Share Button LinkedIn Share Button Multiple Social Share Button

2 Answers

+1 vote

Interest rate is normally set based on inflation rate; if inflation is going up then interest rate is increased and vice versa.

answer Mar 9, 2015 by Neti Srinivas
+1 vote

Higher the interest rate means people have incentive to keep the cash in bank rather then in pocket or spend which reduces the money supply which reduces the inflation.

On the opposite side lower interest rates put more borrowing power in the hands of consumers and when consumers spend more, the economy grows, naturally creating inflation.

answer Mar 9, 2015 by anonymous
Contact Us
+91 9880187415
sales@queryhome.net
support@queryhome.net
#470/147, 3rd Floor, 5th Main,
HSR Layout Sector 7,
Bangalore - 560102,
Karnataka INDIA.
QUERY HOME
...