2/4  BIS - Central bankers' speeches  3 Rising interest rates and the big picture Interest rates are a factor not just for banks but for borrowers, too – and when I say that, I guess everyone here today is thinking of real estate loans.
In a highly flexible economy, such as the United States, shocks should be largely absorbed by changes in prices, interest rates, and exchange rates, rather than by wrenching declines in output and employment, a more likely outcome in a less flexible economy.