In general, the direction of the change in interest rates will

Question

Quizplus · Accepted Answer

Interest rates typically follow the direction of inflationary expectations. If inflation is expected to increase, interest rates will likely increase to combat the inflationary pressure. On the other hand, if inflation is expected to decrease, interest rates will likely decrease as there is less pressure to combat inflation. Therefore, the direction of the change in interest rates is closely related to the direction of the change in inflationary expectations.

In General, the Direction of the Change in Interest Rates