Interest rate increases by central banks have a significant impact on the global economy, affecting various aspects from inflation to investment and international trade. One of the biggest impacts is related to borrowing costs. When interest rates rise, the cost of borrowing money becomes higher, for both individuals and companies. This tends to reduce consumption and investment, which in turn can slow economic growth. In the context of inflation, increasing interest rates are often used as a tool to restrain the rising rate of inflation. With higher borrowing costs, consumer demand for goods and services will decrease, putting downward pressure on prices. However, if too aggressive, this strategy can cause a sharp decline in economic growth, even a recession. The influence of interest rates is also visible in the labor market. Rising interest rates could lead to a reduction in hiring, as companies delay expansion and new investments. This causes an increase in unemployment, which in turn can reduce people’s purchasing power and suppress demand further. In asset markets, rising interest rates can cause significant capital shifts. Investments in stocks and real estate may decline, as investors seek more profitable alternatives in the bond market which now offers higher yields. This can cause a decline in asset prices that have been inflationary. On a global scale, rising interest rates in developed countries such as the US could trigger the strengthening of these currencies. A stronger US dollar will make exports from developing countries more expensive, reducing their competitiveness in international markets. This can cause a trade balance deficit in developing countries, as well as increase their dependence on foreign debt. In a global context, the domino effect of rising interest rates can spread to various countries, especially those that have debt in foreign currencies. These countries may have difficulty paying their obligations, which could lead to a debt crisis. This adds to instability in already fragile global financial markets. Foreign direct investment (FDI) is also affected by changes in interest rates. When interest rates rise, investors tend to be more cautious and focus on countries with greater economic stability and a friendlier investment environment. Countries that are able to maintain low interest rates or stable economies will be more attractive to investors. Overall, the impact of rising interest rates is broad and complex. These policies influence household consumption, corporate investment, as well as the stability of global financial markets, having direct and indirect impacts on economies around the world. A deep understanding of how interest rates interact with various economic variables is important for policymakers and market players to devise effective strategies to deal with these dynamics.