Interest Rates

• Interest rates are the cost of borrowing and the reward for saving.
• If a firms has loans or overdrafts this will affect the amount that has to be paid in interest which is a cost to a business
• Investments will become more or less attractive influencing the ability of firms to grow
• If interest rates are high, saving is more attractive and spending is less attractive for consumers
• As well as this, interest rates affect consumer spending. High interest means that consumers will have less disposable income