Reserve Bank of India

What would happen if interest rates went up?

During the 1970's interest rates on basically everything including savings and CD were well into double digits. What caused this? In order for interest rates to be that high again where would the market in general be headed? I understand how the economy and interest rates generally work but 10,12 percent seems crazy. How bad would inflation be?

Public Comments

1. If interest rates went up it will decrease the purchasing power of the people, which would in turn lead to reduction in inflation as too little money will be chasing too many products.