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Who gains during inflation—borrowers, lenders, or both?
Updated: 11-Apr-2025

Borrowers usually gain during inflation. If they took a fixed-rate loan, inflation reduces the real value of the money they owe. They repay with “cheaper” money. Lenders, on the other hand, lose out if the interest doesn’t match inflation—because their money returns with less purchasing power.

That’s why banks charge interest rates that account for expected inflation. For example, if inflation is 6% and you loan money at 4%, you're actually losing value. Inflation can distort financial decisions if not managed carefully.

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