Interest Rate Definition

An interest rate is the cost of borrowing money or the return earned on deposited or invested funds, expressed as a percentage.

What is an Interest Rate?

Central banks set benchmark interest rates that influence borrowing costs, currency values, and broader economic activity.

Interest rate changes and expectations are among the most closely watched drivers of currency markets.

A central bank raising its benchmark rate from 4% to 4.5% has increased the interest rate by 50 basis points.

An illiquid market is one where assets cannot be easily bought or sold without significantly affecting the price.

Implied volatility is the market's expectation of future price fluctuations, derived from options pricing.

An index is a statistical measure representing the performance of a group of assets, such as stocks, used to track a market or sector.