Interest Rate
Definition
The cost of borrowing money, expressed as a percentage of the principal per year. Central banks use the short rate to manage demand and inflation.
Example
Mortgages at 7% mean a $500K loan accrues $35K interest in year one.
The cost of borrowing money, expressed as a percentage of the principal per year. Central banks use the short rate to manage demand and inflation.
Mortgages at 7% mean a $500K loan accrues $35K interest in year one.