Raising interest rates slows business expansion. It limits new investments by making borrowing more expensive - and borrowing is often an ingredient of business

Raising interest rates slows business expansion. It limits new investments by making borrowing more expensive - and borrowing is often an ingredient of business expansion. (In the case where inflation was high because businesses were over-ambitious) Businesses downsize the workforce either (1) because they are in difficulty already, (2) or because they expect a contraction in their business and want to be better prepared, (3) or because they now doubt that their earlier bold plans will work out. Raising interest rates is often done too late, too much, and too long - which then starts an economic contraction. A "soft landing" is rare so some businesses take measures in advance of that contraction. But normally interest rate increases are because the economy is expanding too fast (which causes price inflation) - normally that's a low unemployement time. Business response will raise unemployment a little but not much. What WOULD raise unemployement significantly is a contraction because interest rates stayed high too long. An oil shock is a different kind of beast: you get price inflation even though there wasn't excess growth. Still... 42% is a signal things are out of control. At that stage are businesses still borrowing at all? So will this increase have much effect?