Inflation is falling.
Why are prices still high?
Separate a slower increase from a falling price level.
Make sense of inflation ↗A clearer view of money
The economy.
Your money.
Connected.
From an interest-rate headline to your next big decision. Understand the connections, explore the numbers and question the assumptions.
Start with interest rates ↘12 free explainers. Practical calculators. Five guided Excel products.
FOLLOW THE CONNECTION01 / INTEREST RATES
A single headline.
Different effects for different people.
Explore the links, one assumption at a time. ↗
LEARN ITCHANGE ITEXPLAIN IT
Start with your question
One subject opens
the door to another.
Inflation is falling.
What could saving
regularly add up to?
See your contributions, modelled growth and purchasing power.
Try the savings calculator ↗Profitable.
But where is the cash?
Follow earnings into the cash needed to run and grow a business.
Understand cash flow ↗01 / Understand the headline
Which interest rate
are we talking about?
A central-bank rate, your mortgage rate and a company's cost of capital are connected. They answer different questions.
The policy rate
A central bank influences the cost of money. Changes can affect saving, borrowing and spending across the economy.
What changed in the headline?
The rate you pay
A mortgage lender also considers funding costs, loan risk and the length of the deal. Your contract determines when a change reaches you.
When does your own rate change?
The return investors require
A business valuation reflects the timing and risk of future cash flows. Its discount rate is not simply the central-bank rate.
What risk does the rate reflect?
Read the connection in two minutes +
Higher borrowing costs can leave some households with less to spend. They can also make a new business investment harder to justify. These effects can change demand, sales and future cash flows.
Timing matters. A borrower within a fixed-rate period may be insulated until refinancing. A saver may receive more interest, but the return after inflation still matters. People with no borrowing can feel indirect effects through prices or employment.
For a business, separate two channels: changes to its expected cash flows, and changes to the rate used to discount those cash flows. Hold one constant while exploring the other. Avoid treating every rate as if it moves one-for-one with policy.
Try explaining this: two households owe the same amount, but only one is refinancing this year. Why might the same rate headline affect their budgets differently?
Reveal the explanation
Their contract terms and refinancing dates differ. The household refinancing soon faces the available new rate; the household still in a fixed period generally keeps its contracted rate until that period ends.
02 / Bring it home
What does one percentage
point feel like?
Change the assumptions to compare two repayment mortgages.
Illustrative example · GBP · not a mortgage quoteChange in monthly payment
+£114more each month at the comparison rate
At 4.00%£1,056
At 5.00%£1,169
Bar shows the starting payment as a proportion of the larger payment.
Interest over the full term£116,702 → £150,754
What this calculation assumes
A repayment mortgage with monthly payments, a nominal annual rate divided by 12, no fees and no overpayments. Each rate stays constant for the entire term. Real deals may reset, include fees or use different conventions. This is not an affordability assessment or a rent-versus-buy comparison.
Payment = P × r / [1 − (1 + r)−n], where P is principal, r is the monthly rate and n is the number of monthly payments. At zero interest, payment = P / n. Total interest = payment × n − P. Outputs are rounded for display.
THE IMPORTANT BIT
A one-point rise here is an assumption you chose. It does not mean a central-bank rate rise will change every mortgage by that amount.
03 / Follow the money into a business
A business is worth more
than a headline number.
Follow a fictional manufacturer's revenue into profit, cash flow and value. Then change the assumptions and explain why the answer moves.
- Forecast the cash. Growth can require investment before it creates cash.
- Consider the risk. A higher required return lowers the value of an unchanged positive cash-flow stream.
- Bridge to shareholders. Debt and other claims affect what remains for equity.
Fictional case · editable assumptions · no live market data
Go from understanding to action
Tools for your money.
Models for your work.
Plan household cash
Budgeting and mortgage comparison workbooks with transparent calculations.
Explore personal finance tools ↗Understand business value
DCF and LBO learning models that connect operations, cash, financing and returns.
Explore valuation learning ↗See the cash ahead
A 13-week forecast to test the timing of receipts and payments.
Explore business cash flow ↗Free to explore
Try the idea.
Then go deeper.
Useful tools first. A structured learning pack when you're ready to work through a full case.
Sources & scope
The rates lesson draws on the Bank of England's interest-rate explainer and its explanation of Bank Rate and spending. Reviewed 14 October 2026. All calculator rates and company figures on this site are illustrative.
Read our editorial approach, explore the finance glossary or visit HelpContact. Examples are educational and rates are illustrative.