Interest rates
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Interest rates

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economics

The Covid 19 pandemic brought about substantial changes in the way we lived. Primarily, this meant staying at home, which affected the economy of all countries, as purchasing and selling things in−person was proving risky.

Apart from trying to develop vaccines, governments across the world injected a great deal of money into the economy, aiming to help the people that were suffering from less income that usual. They usually did this by borrowing money, and getting into debt.

All economists agree that injecting money forcefully means inflation. And so, it happened. But the aid that governments provided is not the only element that could help us understand the ongoing global inflation.

Many companies went bankrupt, meaning millions of jobs had to be axed. Others shut down factories and offices to prevent infections. On the whole, the production chain was disrupted, and the supply of many products went down. At that moment, this was not bad, because people were buying less. But as economic recovery started, companies have failed to catch up with growing demand, meaning the prices have been rising exponentially.

As such, central banks are trying to stop inflation raising interest rates, just like the US Federal Reserve has just announced. This would prevent less money flowing in the economy, thus, hindering price growth. However, some people fear that these measures could bring about another recession.

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