Economicscalendar_todayLast updated: Apr 2026
What is Interest Rate?
/ˈɪntrɪst reɪt/
An interest rate is the cost of borrowing money, expressed as a percentage of the loan amount per year. Central banks set base rates that influence all lending in an economy.
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Everyday Example
If you borrow £1,000 at a 5% annual interest rate, you owe £50 in interest after one year on top of repaying the £1,000.
publicReal-World Application
“When the Bank of England raised rates to 5.25% in 2023, millions of UK mortgage holders saw their monthly payments jump significantly.”
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Did you know?
The concept of interest dates back 5,000 years to ancient Mesopotamia, where temples charged interest on grain loans.
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Key Insight
Interest rates are the lever that central banks pull to cool inflation (raise rates) or stimulate growth (cut rates). Every financial decision is affected by them.
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