What are some bad effects of high interest rates on economy?

[Good-Person]

There are many countries that are suffering from bad debts and bad economical conditions. In such kind of scenario, many countries increase the interest rates because they erroneously believe that interest rates can cool off inflation. However, what are some of the long term bad effects of increasing interest rates?

 

[Frank]

The high increase of interest rate is always a sure way to kill off businesses. Yes, there is need to adjust the inflation rate, but increasing interest rate is as good as making the mess of businesses that are trying to survive in a particular sector of the economy.

 

[Good-Person]

The high increase of interest rate is always a sure way to kill off businesses. Yes, there is need to adjust the inflation rate, but increasing interest rate is as good as making the mess of businesses that are trying to survive in a particular sector of the economy.

Increasing the interest rates do not help businesses. They may temporarily provide relief, but in the long run, they destroy the economy. I think that the US government has also increased interest rates for a long time, but still they have not managed to overcome economical challenges.

 

[Kane]

When the interest rates are high, the prices of commodities will also go high, and when the prices go up, people can no longer afford to buy these commodities, thus the economic activities will slow down. When interest rates are high, the price of raw materials will also increase, therefore, businesses will have o spend more money to produce the products and in order to recover the cost they will increase the price of product and when the price inceases, sales decrease.