Rate Hike

A rate hike means a central bank raises its key interest rate. In simple terms, a rate hike makes borrowing money more expensive. Rate hikes are important because they can slow borrowing, spending, and investment, which may help reduce inflation pressure. When inflation is too high, a central bank may raise rates to cool down the economy. For example, if the Fed raises interest rates, mortgages, loans, and credit card borrowing may become more expensive over time. A rate hike does not mean the economy will immediately fall into recession. It is a tool used to slow the economy, but the final impact depends on inflation, jobs, consumer spending, and business conditions.