When the economy is overheated and inflation rises, the demand for money will be greater than the supply of money. At this time, interest rates will rise and credit will tighten.

1. In terms of deposits, the money supply increases, the liquidity increases, and more money is used for savings. The cost pressure on banks to lend money to depositors is reduced, so the interest rate is reduced. On the contrary, the money supply has decreased, and the money used for saving has also decreased accordingly. The pressure on banks to borrow money has increased, which will raise interest rates.

2. In terms of investment, if the money supply is increased, the liquidity is increased, and the cost of borrowing money by banks is reduced, the loan interest rate will be reduced. On the contrary, if the money supply is less, the cost for banks to absorb deposits will increase and the interest rate will increase accordingly.

Tips: The above information is for reference only.

Reply time: 202 1-09-22. Please refer to the latest business changes announced by Ping An Bank in official website.

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