What are the effects of inflation?
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Rising interest rates should not harm the economy if the economy is strong.
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If this is not the case, then the effect of high inflation on the overall e
conomy can be huge.
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If the benchmark interest rates are raised to check high inflation, it will have a
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major impact on the stock market and correction can be seen in many stocks.
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Businesses that sell physical goods and products such as commodity companie
s can do well in times of inflation
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Also, FMCG companies - those with the pricing power - can also do well.
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Because they have the power to pass on their increasing input cost to the customers.
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But financial assets such as bonds and financial companies are hit hard by inflation
and real estate suffers as well.
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