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The following forces cause interest rate to change:
1.Inflationary pressure
2. Government borrowings
3. Liquidity in the system
4. Global scenario- Fed Reserve's interst rate structure
5. Demand and supply of money
6.Recession
7. Forex exchange market's swing
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∙ 12y ago
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How can targeting interest rates result in inflation sprialing out of control?
It could cause a kind of rubber-band effect on inflation. For instance, if the market is trying to keep interest rates high and the fed keeps dumping money into the market to try to keep interest rates low, one of these forces has to give. The market is going to be suddenly flushed with cash and risks an event that causes what would normally be a natural decrease in interest rates. This would cause a huge interest rate fluctuation and subsequent inflation.
If expected inflation increases interest rates are likely to increase?
Yes, inflation and increases in interest rates usually go hand-in-hand, though inflation is not the sole cause of an increase in interest rates
Would cause a decrease in the supply of money?
raising of interest rates
How can interest rates push a business cycle into a contraction?
High interest rates can promote saving, which in turn can cause a downturn in demand, causing surplus products on the market.
Everythong held constant a decline in interest rates will cause spending on housing to?
FAll
How does bankruptcy affect interest rates on loans and credit cards?
It cause interest rates to rise.
How can targeting interest rates result in inflation sprialing out of control?
It could cause a kind of rubber-band effect on inflation. For instance, if the market is trying to keep interest rates high and the fed keeps dumping money into the market to try to keep interest rates low, one of these forces has to give. The market is going to be suddenly flushed with cash and risks an event that causes what would normally be a natural decrease in interest rates. This would cause a huge interest rate fluctuation and subsequent inflation.
Do interest rates on ARM mortgages change?
ARM stands for Adjustable Rate Mortgage. Adjustable means the interest rate may be changed. Interest rates on ARM mortgages may change.
Why do bank savings account interest rates change over the years?
The interest rate at which they lend out money changes, which changes your interest rate. Banks are a buisness and if their interest rates are lower then your interest rates, they make no money on it. The interest rate taht banks pay is changed because the rate that banks pay to the govenrment changes. Whnever the federal reserve rate changes,your interest rates can change.
What are the interest rates used by the IRA?
There are many different interest rates used by the IRA. Most IRA rates are around 2% and can go up to somewhere around 5%. IRA interest rates can always change.
If expected inflation increases interest rates are likely to increase?
Yes, inflation and increases in interest rates usually go hand-in-hand, though inflation is not the sole cause of an increase in interest rates
What national bank has the best interest rates on their free checking accounts?
Interest rates change daily among banks. To get the most current rates check bankrate.com
Why do banks change their interest rates?
Banks in India change their interest rate depending on the rates decided by the RBI (Reserve Bank of India). The RBI decides the rates at which banks can borrow money from it as well as the rates at which money deposits need to be accepted. Based on these rates banks change their interest rates accordingly. Usually rates are changed to have an impact on the economy like for ex: to curb inflation, to infuse more liquidity into the market etc.
Who Offers The Best CD Interest Rate ?
Interest rates change daily on CD's. The best place to check for updated daily interest rates is the site bankrate.com
How do loan types and interest rates change?
they rate none.
Would cause a decrease in the supply of money?
raising of interest rates
Which of the following factors will change when interest rates change?
The present value of a bond's payment
