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Economics vocabulary · Central Banks and Interest Rates

Credit

Meaning in economics, with examples

/ˈkredɪt/nounCore term

In economics, credit means: Money that banks and other lenders make available to people, firms or governments, which must be paid back later, usually with interest.

In Turkish: kredi, borç verme

How it is used

Central to monetary policy: higher interest rates make credit more expensive and slow credit growth. News reports mention credit growth, consumer credit, credit conditions and a credit crunch, when banks suddenly stop lending. Credit is usually uncountable; for one sum you borrow, say a loan.

Example sentences

  1. The central bank wants to slow credit growth to cool demand.

  2. Small firms complain that credit has become too expensive.

Common collocations

  • credit growth
  • consumer credit
  • access to credit
  • credit crunch
  • tighten credit conditions
  • interest rateThe price of borrowing money, shown as a yearly percentage of the amount borrowed; for savers, it is the return they earn on deposits.
  • monetary policyThe actions a central bank takes to influence interest rates, the money supply and credit in order to control inflation and support the economy.
  • liquidityHow easily money is available in the financial system, or how quickly an asset can be turned into cash without losing value.
  • tighteningA policy of making money and credit more expensive or harder to get, mainly by raising interest rates, in order to slow demand and bring inflation down.
  • real interest rateAn interest rate after taking away inflation; it shows how much more a lender really gets back in terms of what the money can buy.

This word in other fields

The same English word can have a different meaning in another field:

More terms: Central Banks and Interest Rates

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This page explains English vocabulary for learners. It is not financial advice.