Interest rates explorer

What are interest rates?

Interest rates are a hot topic, often featured in the news and the financial pages in tandem with the word inflation. But what are they exactly? In short, an interest rate is a fee charged for the use of a second party’s money. Interest to a lender is the money they will make by lending, and interest to a borrower is the money they will pay to borrow.

By definition, an interest rate is “the percentage of capital charged by a lender to a borrower for the use of assets”.

What determines interest rates?

A country’s central bank sets interest rates, for example, the Bank of England in the UK and the Federal Reserve in the US. Since interest rates are one of the main driving forces behind economic growth, central banks change them to stimulate, slow down, or influence the economy.

Why do investors and traders care about interest rates?

Investors and traders monitor interest rates closely because the market is sensitive to them. Sudden interest rate changes can cause market volatility, driving the price of stocks and other asset classes up or down.

Use our interactive interest rate explorer to compare interest rates by country, see how they have changed over time and view articles about the country’s interest rate.