The Interest Rate Cycle

When it comes to interest rates then there is a cycle that many observe which corresponds to a peak and a trough, as follows:

First, interest rates are increased to make sure a recovery is not too strong

Then they fall in order to stop recession from taking place

Then they are put low in order to try and make sure there is a recovery

Then they begin to rise when the economy accelerates again

However many now believe that these cycles are just not as pronounced as they used to be making control more easy for the bank of england. Of course whether this really is the case and if so why are matters of hot debate.

Many believe that is no getting away from this cycle so it will get seen time and time again in the future unless there is a fundamental shift in the way in which these decisions are taken.

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