Interest rate

Interest rate is the rate at which a borrower pays to a lender for borrowing money. It is usually expressed as a percentage of the amount borrowed over a specified period of time. Interest rates are set by central banks or other financial institutions and they are used to regulate and control the economy. Interest rates can be used to stimulate economic growth by encouraging borrowing and spending, or to slow down an overheating economy by discouraging borrowing and spending. Interest rates can also be influenced by inflation, currency exchange rates, and market forces. In short, interest rates exist to regulate borrowing and lending transactions, and to manage the overall economy.