Short term vs long term effects of interest rate adjustments with reference to central bank
Author(s): S Sankar and Kisshore R
Abstract: Central banks are primarily responsible for interest rate changes, which have immediate and long-term impacts on the economy. In the short term, changes in interest rates have a direct impact on consumer spending, company investment, and borrowing costs. Interest rate increases typically result in lower borrowing and spending, which can impede economic expansion. The long-term effects, however, are more complex. While persistently high interest rates can aid in financial system stabilization and inflation management, they may also impede investment and economic growth. Long-term low interest rates, on the other hand, can promote growth but also increase the risk of inflation, asset bubbles, and unstable financial markets.
S Sankar, Kisshore R. Short term vs long term effects of interest rate adjustments with reference to central bank. Int J Multidiscip Trends 2024;6(12):127-131. DOI: 10.22271/multi.2024.v6.i12b.547
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