Inflation
The Rate of inflation is the speed with which prices are rising in the money. The faster prices rise, the less one can buy with a given amount of money at a future date. Inflation is said to erode the value of money.
Lenders want compensation for lending their money. This compensation is in the form of the interest rate charged on the money they lend. This interest rate must be higher than the rate of inflation; otherwise the lender’s money is losing value faster than it is generating interest.
It is my own view, welcome your comment and I find an excellent blog about forex . you can click here:
| http://dearforexsite.blog.com/2012/03/05/foreign-exchange-education-inflation/ |
No comments:
Post a Comment