Most companies are to some extent financed with debt. When interest rates go up and loans need to be rolled over they will pay a higher interest rate. The resul

Most companies are to some extent financed with debt. When interest rates go up and loans need to be rolled over they will pay a higher interest rate. The result is a deleveraging (companies taking on less debt) but also reducing expenses (layoffs). The relationship between interest rates and inflation is also usually not linear - ie. inflation is 8% on average, you can charge 8% more for your products but your interest payments might very well double (going from 4% to 8% p.a.).