Interest rates

Interest rates are costs that are negotiated between lenders and borrowers.

The interest rate is the amount the borrower pays to the lender to use their money.

The interest rate is a product of the market and market phenomena. They are the outcome of money’s supply and demand.

Interest rates will increase according to the number of individuals seeking to borrow funds.

When interest rates rise, fewer individuals desire to borrow money. If interest rates are high, people pay more to access the same funds. It’ll reduce the borrowing rate, thereby reducing demand for risk assets.

Interest rates may be segmented into two markets:

• The money market

• The bond market.