It is already clear who will bear the cost of inflation. Rising prices hit households hard. Bank of England governor Andrew Bailey warned this week that Britons face a ‘historic shock’ to incomes. Other families around the world face the same reality. Those lucky enough to have savings watched as they were cut to make up for the dramatic increase in the cost of living. There are signs that consumers are also borrowing more with their credit cardsWhile this usually reflects an increase in spending, some economists have warned that this time around, households may take on debt to make up for shortfalls in wages.

This inflation – and its effects – requires a response in the form of higher interest rates. Bank of England There have now been three consecutive hikes in an effort to cool prices. Fed Sounds arguably more determined to control inflation, while European Central Bank A signal has been sent in the same direction.

However, identifying winners and losers from higher interest rates is harder to predict than the impact of inflation. While interest rates are generally thought to affect all borrowers equally, this can be misleading. The ultimate impact on households and businesses may depend on whether they access short- or long-term credit markets to meet their funding needs.

Recent interest rate adjustments by the Bank of England and the Federal Reserve have targeted short-term borrowing costs. The price of this type of debt, such as short-term bank credit, is most sensitive to changes already made by the Bank of England and the Federal Reserve to their “bank rate” and “fed funds rate” respectively.

The ultimate aim of the move is to ease price pressures by removing heat from the economy. But those most directly attacked will be those who use short-term loans, such as small businesses, as a way to manage cash crunch and make day-to-day purchases. For those with sustainable levels of debt, this rising cost, while painful, will not be the end. Unfortunately, for those who are highly leveraged and already marginalized, things may be different. Higher interest rates are good news for households looking to save – interest on bank deposits and other short-term savings vehicles should rise.

What will ultimately happen to long-term borrowers is even more uncertain. The global supply of capital remains plentiful, which means the prices needed for loans should remain relatively cheap: In an ideal world, the cost of mortgages and long-term corporate borrowing would remain manageable.

There are complications, though. Long-term interest rates will rise as the central bank ends its bond-buying program. If inflation is not contained, they could climb further. This “higher and longer” world will have a direct impact on mortgage rates. High-leverage households can feel the pain when their fixed mortgage rates are renegotiated. As the cost of financing in the corporate bond market, used by many large corporations, increases, some businesses will find themselves squeezed as well.

Any analysis of who will lose the most from rising interest rates can only begin with: “It depends.” While unsatisfactory, this conclusion accurately reflects the nature of an economy at a crossroads. The end result is uncertain, but one thing that can be agreed upon is that the sooner inflation is contained, the better the outlook for all.