Interest rate is the cost of borrowing money or the return on saving it. It is a crucial factor in determining the cost of loans, investments, and the overall health of an economy.
Interest rates are set by central banks, such as the Federal Reserve, in the US.
Low-interest rates stimulate borrowing and spending, while high-interest rates discourage borrowing and encourage saving.
The Federal Reserve uses an interest rate policy to manage inflation and regulate the economy.
Interest rates directly impact mortgage rates, consumer loan rates, and investment returns.
Interest rates play a role in determining currency exchange rates, as investors seek higher returns in countries with higher interest rates.
Bond prices and interest rates have an inverse relationship, meaning that when interest rates rise, bond prices fall.
Savings account interest rates are influenced by the Federal Reserve's benchmark interest rate.
The economy's health, inflation, and monetary policy are all factors that influence interest rate changes.
Higher interest rates can slow down economic growth by making borrowing more expensive.
Interest rate changes can significantly impact stocks, bonds, and real estate markets.
