Hey kids! Did you know that inflation (when prices go up) affects how much your money earns in a savings account? When inflation is low, interest rates – the money your savings earn – might also be low. But when inflation is high, interest rates often go up too.
- Inflation and interest rates usually go up and down together.
- High inflation means things cost more, but your savings earn more interest.
- Low inflation means things cost less, but your savings earn less interest.
- Banks change interest rates for many reasons, not just inflation.
| Thing | What happened (example) |
|---|---|
| Inflation (2021) | Around 2% |
| Mortgage Rates (2021) | 2.96% |
| Inflation (2022) | 7.1% |
| Mortgage Rates (2022) | 5.34% |
The Federal Reserve (like a bank for banks!) decides interest rates. They are watching the economy carefully and aren't making big changes right now.
