Interactive
Interest rate simulation
One number ripples through the whole economy. Move the rate and see which way each effect leans.
Interest on a ₱1,000,000 loan
₱60,000 / year
Rates at the baseline: a neutral setting.
- Cost of borrowingMore expensive
A higher makes loans and credit cost more to carry, so people and companies borrow less.
- Consumer spendingSlows down
When borrowing is dearer and saving pays more, households tend to spend less and save a bit more.
- Business investmentPulls back
Firms fund expansion with borrowed money, so pricier credit makes new projects harder to justify.
- Inflation pressureEases
Cooling demand is how higher rates are meant to bring back down over time.
- Stock valuationsCome under pressure
Higher rates make safe savings more attractive and future profits worth less today, which tends to weigh on share prices.