Discussion on Rising Interest Rates (Research Paper Sample)

Rising Interest Rates
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The covid-19 epidemic has had a significant effect on quite many sectors of the economy. Governments across the globe opted to restrict people's movement by instituting lockdowns to slow the spread of the virus, and as a result, many economies suffered. As a result, central banks and other financial institutions slashed interest rates to revitalize their economies and encourage business people to borrow money. However, as more individuals are vaccinated, things will soon return to normal. Economies will reopen, and banks will most likely raise interest rates to keep inflation under control and the economy strong. Although the economic recovery is still possible, individuals and businesses can prepare for increased interest rates by examining their cash flow history, improving credit card status, and prioritizing purchases.[ Anthony J. Makin and Allan Layton, "The global fiscal response to COVID-19: Risks and repercussions," Economic Analysis and Policy 69 (2021): 340, doi: 10.1016/j.eap.2020.12.016.]
In business, sustainability is always an effort to balance expenditure and income. As a result, with an increase in interest rates looming, it is prudent for consumers to examine their cash flow history. Furthermore, firms should analyze their consumers' spending habits to determine how to address changes in consumer behavior. Increasing the interest rate may cause clients' spending habits, lowering cash flow. Customers' spending power is reduced when they must pay high-interest rates on vehicle loans or mortgages. As a result, auditing would assist folks in comprehending company markets and the shifting tides inside the same fields.[ Jakub Janus, "The COVID-19 shock and long-term interest rates in emerging market economies," Finance Research Letters 43 (2021): 101976, doi: 10.1016/j.frl.2021.101976.] [Janus, "The Covid-19 shock," 101976.]
The advantages of prioritizing purchases cannot be overstated. Certain things' pricing will climb as interest rates rise. If someone plans to buy a property soon, they should consider doing it now while mortgage rates are still low. They should perform considerable market research to ensure that they do not buy when inflated prices. “The same is true for those who intend to purchase other expensive products, such as automobiles.” People should think about taking advantage of these cheap interest rate periods. Individuals, however, should only consider such a change if they are making an informed decision rather than succumbing to cultural pressure or excitement.[ Ernest Liu, Atif Mian, and Amir Sufi, Low Interest Rates, Market Power, and Productivity Growth (Willey Online Library, 2019), 40.] [Laurens Defau and Lieven De Moor, "The investment behavior of pension funds in alternative assets: Interest rates and portfolio diversification," International Journal of Finance & Economics 26, no. 1 (2020): 1424, doi:10.1002/ijfe.1856.]
The federal funds rate has an impact on “credit card interest rates.” In addition, growth in the funds eventually raises the flexible rate credit card interest rate. As a result, when interest rates are expected to rise, consumers should concentrate on improving their credit. If they have an adjustable-rate mortgage, they should refinance to a fixed rate. The fixed-rate loans reduce consumers' monthly payments as interest rates rise. However, they should not switch to a fixed-rate loan if they intend to sell the asset or pay off the debt before the period of low-interest rates expires. Finally, it is