Hello my fellow members,
I am a final year student of MBA finance & IB. I am studying the impact of inflation on the interest rate and vice-versa in the international market.
I want to know whether we refer to the borrowing rate or the lending rate when we talk about their relationship with the overall inflation rate.
It would be very helpful if anyone of my member friends could elaborate on that topic. Waiting for a response.
Regards,
Ruchika

From India , Gurgaon
Generally speaking yes, but not necessarily so. The Federal Reserve just raised interest rates 17 times, in order to gradually slow the economy, to prevent inflation from growing wildly, and it seems to be working, at the price of a decaying housing market. The problem is that interest rates were depressed for far too long, which overheated the ousing market in the first place.
Inflation can also be driven by factors other than interest rates... increased demand for a product (oil) can cause prices to rise, as can a reduction is the supply of products.

From India , Bangalore
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