How’s an interest rate hike lower inflation? Take it from an idiot poorboy w a finance degree he never used via /r/wallstreetbets #stocks #wallstreetbets #investing


How’s an interest rate hike lower inflation? Take it from an idiot poorboy w a finance degree he never used

Mortgage rates are now 4% about and will rise. Savings rates will too and those two things will divert wealth…money. Mortgage rates rising will increase a banks assets and savings rates will increase the liabilities. But it’s like oil going up and gas following and then oil falls and gas plateaus. The current ratio of banks will improve. Both rates take money out of typical(not the finance industry) markets. People will save more, a little across the whole country is actually a lot, and that, in theory, lowers demand. IN THEORY. The extra few bucks on the mortgage rates lowers demand too. Lower demand means lower prices. This money inevitably probably just is paid out to individuals at the banks in the form of bonuses and salary increases. So I’d say a play could be luxury brands. Possibly banks too but, I believe, that’s old news.

Most importantly rate increases are to slow down an economy bc things are good. That has always been the case.

Submitted March 17, 2022 at 03:57AM by chadharter89
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