Interest rates are the cost someone pays for the use of borrowed money, or the cost of credit. They influence economic activity by controlling monetary policy and affecting personal and corporate borrowing. Lower interest rates encourage borrowing and spending, while higher rates encourage saving and reduce inflation. Interest rates are a vital tool used by central banks to implement monetary policy.
« Back to Glossary Index
About the author
Jenna Lofton, MBA is a stock trading and investment expert with over a decade of experience in the financial industry. She began her career as a financial advisor on Wall Street and now helps everyday investors make smarter financial decisions through StockHitter.com.
Her insights simplify complex financial topics into actionable strategies for beginners and seasoned traders alike.