What do interest rates actually do to my money?

By Mehdi, Senior Sukuk Fund Manager · Updated May 2026

A fair question: if I avoid interest entirely, why should the central bank's rate concern me? Because it is the tide that moves every boat, including yours.

The short answer: Even though you avoid riba personally, interest rates set by central banks shape the whole world your money lives in — how expensive borrowing is, whether asset prices rise or fall, and how fast the economy runs. You don't have to participate in interest to be affected by it.

A central bank's interest rate is essentially the price of money in an economy. When it raises rates, borrowing gets expensive — businesses and households slow down, the economy cools, and asset prices (including shares) often come under pressure. When it cuts rates, money gets cheap, borrowing and spending pick up, and assets often rise. You can refuse to touch interest yourself and still feel all of this, because it moves the value of everything you do own — your screened shares, your gold, your property, your currency's strength.

Where we stand: we read interest-rate moves not to participate in riba, but to understand the economic weather they create — which season they are pushing us toward, and how a halal portfolio should be positioned to weather it. Knowing what the tide is doing is not the same as profiting from riba; it is simply navigating the sea you must cross.

Notice the irony worth reflecting on: an entire global system is built on the very thing Allah forbade, and even those who refuse it must live within its waves. It is a quiet reminder of why the deen warned against riba so strongly — its harm is never contained to those who practise it.

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This is education, not personalized financial advice or a religious ruling. Screening status can change, and your situation is your own. Confirm a specific holding against its current Shariah screening, and any ruling with a qualified scholar you trust. The decision, as always, is yours, before Allah.