Abstract
This article provides a comprehensive overview of interest rate hikes, focusing on the reasons behind such decisions, the magnitude and frequency of rate adjustments, and the policy objectives driving central banks' actions. Interest rate hikes are implemented to control inflation, manage economic overheating, and stabilize currency and capital flows. The magnitude and frequency of rate adjustments are determined by the central bank's assessment of economic conditions, with larger adjustments made for significant impacts and smaller adjustments for fine-tuning purposes. Policy objectives include price stability and sustainable economic growth. This analysis sheds light on the background and rationale behind interest rate hikes, highlighting their importance in shaping monetary policy and influencing economic conditions. This paper discovers that higher interest rates incentivize individuals to save more, leading to increased returns on savings. However, it also highlights the shift towards fixed-income securities and its potential impact on the stock market, as investors seek stable returns.
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