what causes interest rates to go up?
in Walter Bagehot's Lombard Street he says that when foreign countries cash in their pounds sterling to claim bullion, it is necessary for the central bank to raise interest rates in order to encourage more bullion deposits to prevent a run on the bank (because the bank is running a fractional reserve). But we no longer use bullion and Walter Bagehot lived 200 years ago. So what causes interest rates to go up nowadays?
in Walter Bagehot's Lombard Street he says that when foreign countries cash in their pounds sterling to claim bullion, it is necessary for the central bank to raise interest rates in order to encourage more bullion deposits to prevent a run on the bank (because the bank is running a fractional reserve). But we no longer use bullion and Walter Bagehot lived 200 years ago. So what causes interest rates to go up nowadays?
