PLR - affecting the micro economics and the macro economics

Macro Economics

If the prime lending rate is increased, the borrowing cost would increase. This would slow down the production of the companies. This is would result in slower growth of the industry. The GDP would be affected. Because of lesser revenue and lesse profits, the tax to the government would decrease.

This will decrease inflation

Micro Economics

From microeconomics perspective, high PLR will hit the production. High lending rates will also hit the consumer demand. The company may then have to cut down on the production, lay off staff, take care of the inventory and other things in the purview of micro economics.