Interest rates are the percentages charged or earned on borrowed or invested money, respectively. They represent the cost of borrowing or the return on investment over a specific period, typically expressed as an annual rate. Interest rates are influenced by various factors, including central bank policies, inflation, economic growth, and the supply and demand for credit.
In the context of borrowing, interest rates determine how much borrowers will pay in addition to the principal amount loaned. For savers and investors, interest rates signify the return they can expect on their deposits or investments. Additionally, interest rates can be either fixed, remaining constant over the loan or investment duration, or variable, changing based on economic conditions or benchmarks.
Interest rates play a crucial role in the economy, affecting consumer spending, business investment, and overall economic activity. They are a key tool in monetary policy, used by central banks to control inflation and stabilize the currency. Changes in interest rates can signal shifts in economic policy and influence financial markets.
Tyler Schipper, økonomiprofessor ved Universitetet i St. Thomas College of Arts and Sciences, ble nylig intervjuet av Marketplace om Federal Reserves beslutninger rundt justeringer av rentesatsen og de påvirkningene rentesatser…