Interest Rates

Interest rates refer to the amount charged by lenders to borrowers for the use of money, expressed as a percentage of the principal amount. Alternatively, it can also describe the return earned by investors on deposits and other investments. Interest rates are a key component of economic policy and can significantly influence economic activity. They are typically set by central banks and can vary based on factors such as inflation, economic growth, and market conditions. Higher interest rates generally discourage borrowing and spending, while lower rates encourage them. Interest rates play a critical role in determining the cost of loans, impact consumer behavior, and influence savings and investment decisions within the economy.