Finance Library
EconomicsIntermediate 4 min read
Interest Rates
The price of money — and why central banks move them.
What they are
An interest rate is the cost of borrowing money, usually expressed as a percentage per year. Lenders charge it; savers earn it.
Why central banks set them
Central banks adjust short-term rates to cool down or warm up the economy. Higher rates slow borrowing and spending; lower rates encourage them.
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