What are interest rates?

An interest rate is a percentage that represents the cost or return generated by a loan or certain saving instruments.

When we ask a bank for a loan, the interest rate determines the cost of that loan, in other words, the amount we have to pay for borrowing that money. In the case of a saver who deposits money at a bank, the interest rate is the return generated by that deposit.

Therefore, interest rate changes affect us all, whether we are savers or borrowers. That is why it is important to keep an eye on interest rates and understand how they will affect our savings and investments.