Qualitative scenario map
Interest Rate Transmission Map
Trace possible directions through borrowing, investment, spending, inflation, and employment without treating them as guaranteed forecasts.
Scenario
Directional result
What this map does and does not do
The control records the policy-rate scenario. It does not assume bank lending rates, bond yields, exchange rates, mortgage payments, output, or inflation move one-for-one. Transmission varies with expectations, balance sheets, financial structure, fixed-rate contracts, credibility, fiscal policy, external shocks, and lags.
First stage: policy rate, market rates, asset prices, credit conditions, and exchange rate may respond.
Demand stage: financing and wealth conditions can change consumption and investment.
Outcome stage: output, employment, wages, and inflation respond with uncertain magnitude and timing.
The “recession” and “overheating” choices scale only the displayed policy-rate scenario label; they are prompts for comparison, not estimated multipliers.
Sources
- Bank of England: Bank Rate and monetary-policy transmission
- European Central Bank: Transmission mechanism
- Federal Reserve: Monetary policy
Educational qualitative map only; not a forecast or financial advice.