Higher interest rates tend to reduce stock valuations because they raise discount rates and borrowing costs.

Is it true that higher interest rates tend to reduce stock valuations because they raise discount rates and borrowing costs?

Unclear. One study of the Lusaka Securities Exchange reports that stock prices fell when interest rates rose, and a decomposition paper finds a strong link between pure discount-rate shocks and equity valuations, though the unconditional rate-valuation relation is weak. Other items support the borrowing-cost half of the claim but do not address stock valuations.

Verdict: PARTIAL LEAN · 4 sources for, 0 against · Last checked 2 Oct 2026

The private library was unavailable for some searches in this check. Missing library results are not evidence against the claim.

Gormsen, N. J. & Lazarus, E. (2026). Interest Rates and Equity Valuations. doi.org. https://doi.org/10.2139/ssrn.6171489

INTEREST RATES (Evening Post, 04 October 1935). (1935). paperspast.natlib.govt.nz. https://paperspast.natlib.govt.nz/newspapers/EP19351004.2.91

Financial uncertainty and interest rate movements: is Asian bond market volatility different?. (n.d.). cir.nii.ac.jp. https://doi.org/10.1007/s10479-021-04314-7

Nyamadzawo, N. (2024). The Impact of Changes in Interest Rates on Zambian Stock Prices in Zambia. zenodo.org. https://doi.org/10.5281/zenodo.14191123