An increase in a country’s benchmark interest rate has a significant impact on global markets. One of the first impacts was the strengthening of the country’s currency. When central banks raise interest rates, investors tend to shift their funds to assets that offer higher returns, thereby increasing demand for the local currency. A clear example is when the US Federal Reserve raises interest rates, the value of the US dollar often increases, making imported goods cheaper, but also potentially weakening the competitiveness of exports. Furthermore, the increase in benchmark interest rates affects international capital flows. Countries that offer higher interest rates attract more foreign investment. This is common in developing countries that have rapid economic growth but are vulnerable to investor fluctuations. When interest rates increase, capital flows can flow in quickly, increasing liquidity in the market and supporting economic growth. However, capital outflow can also occur suddenly if investors withdraw their funds to invest in countries with higher interest rates. The increase in benchmark interest also has an impact on borrowing costs. For companies, financing costs are higher, which can slow down expansion and investment. This applies not only to national companies but also multinational companies that have exposure in local markets. As capital costs rise, many projects previously considered viable become unprofitable. In the banking and finance sector, rising interest rates generally contribute to increasing bank profit margins, as the difference between the interest received on loans and the interest paid on deposits increases. However, this can also cause an increase in default rates if customers are unable to pay installments. An increase in benchmark interest rates often leads to tightening of credit, which can slow down economic growth, both domestic and global. The socio-economic impact cannot be ignored either. Rising interest rates can make financing various sectors, including housing and education, more expensive. This can exacerbate social inequalities, especially among low-income people who are more vulnerable to changing economic conditions. An increase in the cost of living due to more expensive loans can cause a decrease in people’s purchasing power and consumption, which ultimately impacts economic growth. Lastly, commodity markets are also affected. A country that increases interest rates usually faces a decline in commodity prices. As the US dollar strengthens, the price of oil and other raw materials traded in dollars will rise, reducing global demand. Investors will tend to shift from riskier assets to safer assets, such as government bonds, which can cause volatility in commodity markets. Overall, the increase in benchmark interest rates has a broad impact covering aspects of currency, investment, borrowing costs, economic growth and social stability. The two are interrelated and can affect the stability of the global market as a whole.