How will interest rate hikes affect inflation and the economy in 2025?

Interest rate hikes in 2025 will likely be a tool used by central banks to combat inflation. Higher rates make borrowing more expensive, which can reduce consumer spending and business investment, helping to slow down inflation. However, these hikes can also lead to slower economic growth, as businesses may scale back on expansion and hiring. Additionally, higher rates might increase the cost of existing debt, putting pressure on highly leveraged companies. In the long run, if inflation is controlled, the economy may stabilize, but the short-term impact could be a mild recession or slower recovery.