Monday, September 25, 2023

What is the relationship between inflation and interest rates?

The European Central Bank has started raising interest rates to combat inflation. Inside Financial Health Podcast. We interviewed Camilo Andrés Ulloa, chief economist at BBVA Research’s Spain and Portugal division. It helps us find out what consequences such an abrupt increase in interest rates has on the economy and what impact this increase has on our personal economy.

The first thing we need to do is know what we mean when we talk about it Inflation. In a market economy, the prices of goods and services are subject to change. Some gain weight, others lose weight. Inflation is when there is a general increase in prices that causes the current value of the currency to be lost.


We are currently participating in one rising prices This is mainly due to the collapse of supply chains as a result of the pandemic or the increase in raw material and energy prices due to the war in Ukraine. This increase leads to changes in families’ living standards as their purchasing power decreases, but also has a significant impact on personal savings. Inside Financial Health Podcast We spoke with Joaquín García Huerga, Director of Global Strategy at BBVA Asset Management, who will clarify the current situation of inflation and the types that exist.

On the other hand, we need to know what that is Interest charges, the price of money. These interest rates represent the cost of a loan, i.e. the costs that the bank charges you for granting the loan. They must be distinguished from the official interest rates, which refer to the interest rates set by the EU European Central Bank And these are the ones who charge banks fees for the loans they request, and those who pay the same companies for the electronic money they deposit with the ECB overnight. You can find out all this and more below Financial Health Podcast.

All chapters of BBVA Podcast You can find them on the following platforms: iVoox, Apple Podcasts, Spotify, Google Podcast and more

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Nation World News Desk
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