What happens if central banks raise or lower interest rates? Why are these important? Let's talk about this a little bit.

If central banks increase interest rates, they resort to tightening policies to prevent social unrest. It deposits its capital money to maturity through central banks or banks. There is insufficient money in circulation in the current market and there is a supply and demand problem. Thus, central banks increase supply and print money to meet demand and money is put into circulation. This situation causes expensive and high inflation in the economy. If a multiplying interest rate environment occurs, the free market will dominate in that country. More interest requires printing more money and meeting the demand for money in the market. The printed money goes out of circulation again and goes into forwards. As a result, society experiences a high cost of living crisis. If interest rates increase, loan interest rates also increase and interest in investment loans and consumer loans decreases.

In case of interest rate reduction, the money tied there will not be attractive and will be put back into circulation since the money will not make a profit in the future. There will be relief in the economy again, money will flow to local and foreign investment sources, the cost of living will still continue, but there will also be an increase in gold, foreign currency and crypto assets. If interest rates decrease, loan interest rates also decrease and interest in consumer loans and investment loans increases.

In countries with bad economies, the loan withdrawal process may be suspended even if the interest rate increases or decreases.