why interest rates go up?
438298
I'm sure an Econ person is way more qualified than I to answer this question but it deals with supply and demand.\n\nThe cost of lending money (as in rising interest rates) makes less people borrow it which means that there will be less people buying goods and services which keeps inflation in check.\n\nThe more it costs banks to lend money by borrowing from the federal reserve, the more they have to charge people who take out loans to recoup that costs.  This means that the price point for borrowing money is higher meaning less people will borrow money because they have to pay back more.\n\nIn the grand scheme of things, this makes business keep their prices in check and not raise them as high as they would like.
61506
When interest rates are going up, avoid long-term bonds.  You might want to look at I Bonds as the rate will vary every 6 months.
1179164
The whole point is that the economy is moving *too* fast right now.  Same thing in the 20s before everything overheated and collapsed.  The point of raising interest rates is to slow down the economy so that it grows closer to 3% instead of the 5.6% that just got reported today.  They're not trying to raise rates so much that deflation happens.
1116586
If higher interest rates contribute to inflation then the Federal Reserve so have it wrong!!\n\nMost inflation is believed to come from an over active economy with too much money chasing too few goods. By  raising the cost of borrowing money, it reduces the amount of money people have to spend on more stuff. That slows down the economy. \n\nMost businesses don't rely on borrowed money to stay in business. They typically used borrowed money to expand their business or acquire other businesses.
615447
When you are saving, you want the best rate you can get. If, for example, the US has the highest interest rate, everyone would want to save here and the dollar would be in demand, thus, people would be willing to pay more to get it. Is that simple enough?
1028086
It is going up as of July 1st.  You need to consolidate and begin paying on your loans, or you will end up paying a higher rate.  There is a loan calculator at the website cited below.  It should help you to decide what to do.
768822
Interest rates, stock market health...  Basically any competing product.  When things are good in higher risk (stocks), bonds don't do as well.  When the market is tanking, then bonds become more desirable.
389057
I agree with VATreasuries, whom I will say has a very appropriate user name.\n\nHigher interest rates affect the monthly amount of money that people need to debt service a property.  Essentially, if money costs more... their costs are higher accordingly.\n\nOther factors like taxes & hazard insurance have similar effects (we Floridians know this all to well) restricting value.  Herein Monthly Costs.\n\nWhen these Monthly Costs exceed pace of income growth to where they become a higher ratio of gross income needed to service monthly... property values tend to recede.\n\nThese past years have arguably been an anomoly... largely because of an influx of investment dollars into real estate holdings.
1158255
You've got it reveresed.  Lower interest rates (ie: price of money) lead to an increase in demand for borrowing, which puts more buyers into the market because lower rates mean lower payments, which means that more people can afford to qualify for mortgages.  More buyers in the market leads to a sellers market, because there are more buyers to bid up prices.   High rates do the opposite, because with a lower demand for borrowing, there are fewer buyers, and they can wait for the sellers to cater to them.  \n\nYou want to sell when rates are low, and buyers are eager.  You want to buy when sales are slow and sellers are worried.\n\nMortgage rates actually affect refinancing more than purchasing.  It's only when rates are above, say, 8% that you'll see a significant slowdown in purchasing due to interest rates.
136387
There is in fact a law but it has a high limit. I think its something like 33% over current prime rate. this could mean interest as high as 39%.
508214
The Reserve Bank of a country usually will decide how much money is in circulation.\n\nThis is governed by the interest rate it will charge for the money that is on offer for borrowers which can be other banks who will in turn lend it to other borrowers.\n\nIf the inflation is likely to increase then the supply of money is restricted by increasing the interest rate so that the borrowers will not borrow or borrow less.\n\nConversely to kick start the economy the interest rates are decreased so that the companies will borrow and start the businesses and promote economic growth.
1124998
It all depends on the interest rate.  The higher the rate, the more the payment will be.
688950
the short answer is inflation . when inflation is high the fed will raise the interest rate to combat and try to slow down inflation .
777146
Prime rate was 7% on 11/05 and 8.25% on 11/06.  The reason why they go up is because of the Fed wants inflation to remain below 3%.  Too much inflation hurts everyone because prices increase rapidly.
515952
Well, their action last week "hurt" the economy -- they're completely aware of that, and did it on purpose.\n\nThe Fed raised interest rates with the specific purpose in mind of slowing economic growth ("hurting" the economy).  They did so because they feel that too much economic growth can cause inflation, which they consider worse than slow economic growth.  Higher interest rates means it's more difficult and more expensive to borrow money, both for businesses and consumers.  That means less businesses will borrow money so they can grow, and less consumers will borrow money to buy things, slowing both capital investment and consumer spending -- and slowing the economy.\n\nTheir policies over the last 20 years or so have led to a more stable US economy than in the past, with less wild swings of growth, inflation, recession, etc.  We still have ups and downs, and the economy can still be affected by major events such as 9/11 or stock market crashes -- but not as much as in the years before the Fed took such an active role.\n\nSo even though their action of raising interest rates was designed to "hurt" the economy in the short term, over the long term their policies have resulted in a more stable US economy that is generally a benefit to both businesses and consumers.
165677
In a recessionary type environment, expansionary fiscal policy can promote employment by increasing demand for goods and services. This occurs when a rise in consumption happens from things like a lowering of taxes giving consumers more free money to spend.\nThe government will borrow more money which will make interest rates rise. This will attract foreign investors which in turn will bring the value of the dollar up. If the dollar is worth more, then imports will be cheaper (while exports will be more expensive to the recipients).
613289
it seems good to people who make financially investments.  You will notice that return on mutual funds are doing good, 401K etc.  The interest rate to borrow money is higher  now and the return on investing your money is higher which yields a win/win.