Interest rates.
Definition
The percentage charged by a lender to a borrower for the use of money, or the percentage paid to a saver by a financial institution. The Federal Reserve influences interest rates to control inflation and stimulate or slow economic activity.
Examples
Real-world.
- 1 A bank charging 5% interest on a home mortgage loan
- 2 The Federal Reserve lowering the federal funds rate to near zero during the 2008 recession
- 3 Credit card companies charging 15–25% annual interest on unpaid balances