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Economics vocabulary · Central Banks and Interest Rates

Interest rate

Meaning in economics, with examples

nounCore term

In economics, interest rate means: The price of borrowing money, shown as a yearly percentage of the amount borrowed; for savers, it is the return they earn on deposits.

In Turkish: faiz oranı, faiz

How it is used

In economic news, interest rates usually means the central bank's policy rate: the bank raised, cut or held interest rates. Banks also set rates on loans, mortgages and deposits. Often shortened to rates: rates are high.

Example sentences

  1. The central bank kept interest rates unchanged for the third meeting in a row.

  2. Higher interest rates make mortgages more expensive and usually slow down house price rises.

Common collocations

  • raise interest rates
  • cut interest rates
  • hold interest rates
  • low interest rates
  • interest rate decision
  • policy rateThe main interest rate set by a central bank, which guides the rates that banks charge each other, businesses and households.
  • central bankThe national institution that issues a country's currency, sets the main interest rate and works to keep prices and the financial system stable.
  • rate hikeAn increase in the central bank's main interest rate, usually made to cool demand and bring inflation down.
  • rate cutA reduction in the central bank's main interest rate, usually made to make borrowing cheaper and to support growth and jobs.
  • 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.

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.