Inflation is based on the total price of a basket of goods compared to the price you’d have paid for the same basket a year ago

Interest rates represent the price of credit and can be used to control economic growth

Interest rates—you’ve certainly paid them. But why did you pay the particular interest rate you had to pay? Who figures that out, and how? That calculation is related to a lot of other stuff. To the inflation rate—whatever that is. To economic growth—however that comes about. Maybe even to the employment rate—don’t even get me started on the Phillips Curve, which is supposed to show the relationship between unemployment and inflation.

If you too don’t know quite what this all means, Allar and Matt are here to help. On A Dictionary of Finance podcast, they got together with two of the European Investment Bank’s top economists to explain inflation, interest rates, growth and employment.

Natacha Valla is the head of the Policy and Strategy Division in the Economics Department at the European Investment Bank and Markus Berndt heads Operational Strategy and Business Development at the EIB. They have a couple of PhDs between them and have worked at central banks, international financial organisations, and top consulting services. Now, they are at your service on A Dictionary of Finance.

Subscribe to A Dictionary of Finance podcast in the iTunes podcast app or on other podcast platforms like Stitcher. You can suggest topics for future podcasts by tweeting to Matt or Allar. We’re @EIBMatt and @AllarTankler.