The Impact of Interest Rates on Business
- The interest rate is the cost of borrowing money and the reward for saving
- Lenders charge interest on borrowing at a rate higher than that of the Central Banks base rate and award a lower rate on savings and investments
- The Central Bank is the Governments bank and is responsible for managing the flow of money in an economy and also regulating the banking system
The Implications of Rising Interest Rates on a Business
Implication |
Explanation |
Higher loan repayments |
|
Fall in exports |
|
Credit sales fall |
|
Savings become more attractive than investment |
|