Interest rates and the economy

Frederic asks what will happen to interest rates in his country over the coming months and years and what the impact on the economy will be, noting the prime rate is around 1.25%.

The Wonders say the economy will grow slightly and accelerate over the next two to three years, which typically results in an increase in the prime rate to slow it down.

They see a high probability that inflation will start to take over in his country, so interest rates will increase — bad for borrowers, good for savers.

They add that the European Union faces a great deal of crisis over the next three to seven years, creating inflationary pressure on most member countries.