If interest rates go up 1%, what are the effects on the economy?

Question

Does the economy suffer short term? Does inflation go down long term?

What is the effect on the stock market and on precious metals?

Answer 1

Increasing the interest rate  slows the economy and curbs inflation. That does not necessary mean the economy suffers because slowing  economic growth during booms to sustainable level and keeping inflation in check extends the periods of expansion. The effect on the stock market  depends on whether or not investors think it is done at the right time but higher rate increase the costs for firms that rely on borrowed funds so more often than not the market will fall. The price of gold  increases when the dollar is unstable and high inflation is expected, but does  not respond to fed policy in ordinary times.