Effects of high interest rates on the economy

Interest rates are a crucial tool for central banks to conduct monetary policy and steer the economy. They affect various agents and sectors, playing an active role in money supply and demand, and influencing key macroeconomic indicators. In this desertion, I aim to provide the rationales behind the recent upsurge in the interest rates and a comprehensive description on how interest rates can impact the different agents. To accomplish this objective, is conducted an extensive examination of different instruments central banks have at their disposal to perform their monetary policy actions so that readers can get to know their appliance to the different circumstances. In addition, the thesis delves into an elucidation of the different channels through which monetary policy reaches the economy, furnishing readers with the appropriate tools to discern the area’s most profoundly affected by recent actions taken by central banks. Overall, this thesis provides a detailed portrayal of monetary policy's role in achieving economic equilibrium and its resulting effects. By enhancing comprehension of the current economic landscape and the desired trajectory for future economic progress, this research aims to contribute to a broader understanding of the subject matter.