Higher Interest Rates Favor Savers, but Inflation Can Alleviate Debt Burden

High interest rates tend to decrease overall demand within the economy by benefiting savers while burdening debtors. However, inflation can complicate this dynamic. As wages rise in response to inflation, the real value of fixed nominal debts diminishes, providing debtors with relative relief. Thus, the relationship between interest rates and economic impact isn't a straightforward transfer of wealth from debtors to savers; various factors such as inflation and wages play pivotal roles in shaping financial realities for different economic actors.