Interest rates are on the rise in both Canada and the U.S., what does this mean for consumers and investors? Find out with today’s episode!
Intro/Outro Music:
Episode Music: …(read more)
LEARN ABOUT: Investing During Inflation
REVEALED: Best Investment During Inflation
HOW TO INVEST IN GOLD: Gold IRA Investing
HOW TO INVEST IN SILVER: Silver IRA Investing
What do Rising Interest Rates Mean?
Interest rates play a significant role in the global economy, affecting everything from personal finances to the performance of businesses and stock markets. When interest rates rise, it can have various consequences for individuals, corporations, and even governments. Let’s delve into understanding what rising interest rates actually mean and how they impact different aspects of the economy.
To begin with, rising interest rates indicate that the cost of borrowing money is increasing. When central banks increase interest rates, commercial banks will also raise the interest rates they charge to borrowers. This directly affects people’s ability to take loans, be it for purchasing a home, a car, or funding personal expenses. As a result, borrowing becomes more expensive, and individuals may find it harder to obtain credit.
Furthermore, rising interest rates can impact the mortgage market. Homebuyers will face higher monthly mortgage payments if they have variable-rate mortgages. Additionally, potential homeowners may be hesitant to enter the market due to increased borrowing costs. This can lead to a slowdown in the real estate sector, affecting housing prices and the overall economy.
Not only does the average person feel the effects of rising interest rates, but they also have implications for businesses. Companies often rely on borrowing funds to finance their operations, expand their facilities, or invest in new projects. When interest rates go up, businesses face higher borrowing costs, reducing their profitability. Higher interest rates can also cause consumers to reduce their spending, impacting companies’ revenue and growth prospects.
Another significant impact of rising interest rates is seen in the stock market. When interest rates rise, investors often shift their focus from buying stocks to fixed-income investments like bonds. This is because bonds offer higher returns when interest rates increase, making them an attractive alternative to stocks. Consequently, the demand for stocks decreases, leading to a potential decline in stock prices.
On the bright side, rising interest rates can have positive effects on savers. Banks normally increase interest rates on savings accounts when interest rates rise, enabling people to accumulate more money from their savings. This can serve as an incentive for individuals to save more and even invest in safer fixed-income options such as government bonds or certificates of deposit.
It is essential to note that rising interest rates often reflect a strong economy. Central banks typically raise interest rates to control inflation and prevent an overheating economy. Higher interest rates can slow down economic growth, control consumer spending, and keep inflation in check.
In conclusion, rising interest rates entail several implications across different sectors of the economy. While they make borrowing more expensive for individuals and businesses, they can potentially benefit savers. Additionally, rising interest rates can also impact the real estate market and the stock market. Understanding the effects of rising interest rates is crucial for individuals, businesses, and investors to navigate and make informed financial decisions in an ever-changing economic landscape.
Oh yeah, back in the turbulent times of May 2018 :p
Will never happen rates will stay low forever so we can get access to cheap money.
– mortgage holders
Suit jacket seems kinda too long lol
Sir plzzz explain that how short term rates influence bonds prices and who are participants in primary bonds market …
Hey Richard, also at 5:28 investors have less money to invest because of higher interest rates, right?
Thanks!
I live your clear way if speaking!!
Can someone explain to me how raising interest rates brings down inflation.? The present inflation is caused by extortionate fuel prices causing food prices to rise as well as higher mortgage rates and higher rent increases plus higher council taxes. Raising interest rates exasperated this causing higher inflation. This of course means people ask for higher pay rises causing more inflation. The bank of England need to be more creative and more proactive in it's approach instead of trying 1960s and 70s methods. Which failed then so why keep doing it.
Silicon Valley brought me here.
Wow, and this was before the Covid policy craziness.
This interest policy is Ribba and it’s haram
Great video, especially for the current times
Nice video but sound of music is too high and distracting
Right now very relevant info.
legend
What a bunch of Keynseian rubbish! Go read some Mises if you actually want to understand what's really going on.
thanks Man ALL THE WAY FROM AFRICA
the only channel i found where this topic was explained so well and with easy words so that a new guy can understand well and clear
Another great video!
thanks
Mil ? No…
Lol
In 2022-23 we're experiencing the mother of all market corrections onto of an all out Geo-economic war between East and West . Hang Tight
the rare video that has aged well
Excellent!
Welp so whos here in 2022 lol
Great effort
Thank you so much
debt….but debt to whom big banks or the people………
Finally a bear market.
lmaoo look at the world now
We have to pay for everything much higher and on top of that these crazy rates makes the living pressure higher and the same time the tax payers are paying for over 2 million illegal immigrants hotels and food. Gold bless America.
In glad you have sorted out the background music in more recent videos, it is really distracting.
what do rising interest rates mean? it means i can lock onto 1980s 12% CD's for 15 years.
Rising interest rates is a way of controlling expenditure . A way telling us to pipedown
Fire the politicians. They are punishing the average person, making them pay for their mistakes while they continue increasing their own salaries. Tax the rich and regulate their income during wars and pandemics instead of helping them get richer by stocks in the drug market and the weapons market. This is an international problem.
fucking property and fucking property land lord fucking houses etc bulshit economy
The resolution is to drive unemployment up to reduce demand…. Great, can’t wait to see homeless people everywhere.
Real weird seeing you in a suit
pretty good for understanding overview of macroeconomic
Bruh I'm so confused
thank you so much for this easy explanatory video
everyone in the world need to see this video in this times.
0:30 BCRA sube el tipo de interes subiendo el interes de la tasa de fondos federales
Porque lo hace? Porque no es bueno que la economia este demasiado bien y se aleje tanto de su pib potencial
He either speaks too fast or I still don't understand the topic at all. Too many terms for me to understand, my English is very poor and my intellect is not very good.
wow amazing explanation
who is watching in June 2022 when the Fed just raised the rates 75 basis points, the most since 1994?