Inflation and Interest Rates 3

Inflation and Interest Rates In the event of high inflation, central banks typically resort to raising interest rates on deposits. This, in turn, increases lending rates. Higher borrowing rates reduce the availability of new investments and increase their costs. Consequently, the rate of new investments is closely linked to the unemployment rate in any society. The inception or birth of new investments increases the labor force. The rising costs of existing industrial or commercial establishments significantly impact the size of the workforce in any establishment. This may prompt senior management to dismiss employees and consolidate several jobs or tasks previously performed by three employees into one. This is what Elon Musk did when he began his work with the Trump administration, dismissing government employees and US aid agencies without considering the social aspect and the rising unemployment rate. script async src="https://pagead2.googlesyndication.com/pagead/js/ads...