High Interest Investment

Why are higher interest rates good for the Economy?

I read the news that the Bank of Japan is going to increase the interest rates.I thought that low interest rates promote investment and boost the confidence in the economy. So, why does the Bank of Japan want to raise the interest rates..

Public Comments

1. Help stop inflationary trends. You thought on low interest rates isn't necessarily true, but not false either. It depends on what is happening in the economy.
2. Its not ! will slow our economy down
3. Low interest rates can cause economic growth. But if the rates are too low, then the economy can't grow as fast as the money supply does, and that causes inflation. It's a balancing act. Too low, and you have inflation. Too high, and you have a recession.
4. With lower interest rates, the economy has more money to spend and therefore will buy more. If an item, like gas, is being bought more, the corporations will raise the price. If the interest rates are raised, there will be less money to spend and less will be bought. The prices are then lowered by the corp. However, the gas companies aren't doing this, thus screwing our economy over.
5. weeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeee the interest rates are so good for the economy becausehigher interest rates mean that the economy will gain not lose thats why people who make a certain amount have to pay interest thats why adultas hate tax year.
6. A higher interest rate means that people are spending more money. So, enough money is already going into the economy. When interest rates are lowered, it means people haven't been spending so they need to be encouraged to spend. When interest rates are higher- banks make money. Big bucks.