A rate that is paid on borrowed money. Interest rates are printed as a percentage of the lent amount. For example if $10 is owed monthly on a $1000 balance, then the interest rate is 1% monthly. |
Used by major banks and institutionals, the benchmark interest rate is set by a central bank or monetary authority and is widely referenced when applying rates of interest to more commercial or retail loans. Separately, higher rates of interest usually accompany rising expansion as policy makers attempt to calm price increases. Conversely, lower rates are applied to spur economic activity.
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