When Fed raises them, some costs won’t go down

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Interest rates: When Fed raises them, some costs won’t go down

  • Fed rate hikes have triggered a stock sell-off and heightened the risk of recession.
  • But they also aim to stop rising prices.
  • Which prices could the hikes lower and which prices won’t be affected?

The Federal Reserve’s aggressive interest rate hikes this year have triggered a massive stock market sell-off and significantly increased the risk of recession all in the name of bringing down soaring inflation. 

But will it work? 

Rising rates increase consumer and business borrowing costs, which reduces demand for products and services broadly, leading suppliers to cut prices or stop raising them. But the immediate effect varies significantly across individual goods and services.

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