Interest rates represent the percentage applied to a sum of money, determining the cost of borrowing or the return on investment.
Set by central banks or determined by market forces, interest rates influence economic activity. Lower rates generally stimulate borrowing and spending, while higher rates can curb inflation. They impact various financial products, including loans, mortgages, and savings accounts.
Investors closely monitor interest rates as they affect bond prices and stock valuations. Central banks may adjust rates to achieve economic goals like price stability and employment.
