What determines inflation rate?

The inflation rate is determined by a variety of factors, including the supply of money in circulation, the demand for goods and services, and the overall strength of the economy. Central banks such as the Federal Reserve use monetary policy tools to influence inflation by adjusting interest rates, controlling the money supply, and managing the value of the currency. Other factors that can impact inflation include changes in production costs, taxes, and government policies. Ultimately, the inflation rate reflects the balance between the supply and demand for goods and services, and the health of the overall economy.

The effects of inflation are often not directly felt but are played out over a long time, especially long-term investments are vulnerable to inflation.


At Horizon65, we created a mobile app that enabled you to check the effect of inflation on your savings.

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