Interest Rates

• Interest Rates

  The rate of return on financial assets or financial instruments. It is the price that brings about equilibrium in the financial market.
• Short-term Interest rates

  Loans with maturity of less than a year
• Long-term Interest Rates

  Seen as riskier and are less liquid. The return required will be higher and lenders will receive a higher interest rate
• Lending Rates

  Financial institutions charge a rate of interest when they make loans to customers. Institutions make a profit by charging a lending rate that exceeds the borrowing rate
• Borrowing Rates

  Financial institutions act as borrowers of funds when they accept savings deposits as banks effectively use these to make money by lending these funds to other borrowers
• Nominal Interest Rate

  Interest rate before taking inflation into account
• Real Interest Rate

  Interest rate adjusted to remove the effects on inflation