Why interest rates matter for ASX 200 shares

There’s been increasing talk in recent days about rising bond yields and how that may impact ASX 200 shares. Many investors may be thinking, “what do interest rates have to do with my shares?”

There could be some important relationships and potential implications from the current interest rate spike.

What’s going on with interest rates?

In simple economic terms, central banks like the Reserve Bank of Australia (RBA) lower interest rates to kickstart the economy.

When rates are low, individuals and corporations are more likely to borrow money. That money is then invested back into assets and projects that boost employment and help drive economic growth.

One common misconception is that central banks like the RBA set interest…