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Interest rate — definition & meaning

The rate set by central banks that influences currencies and markets.

An interest rate is the cost of borrowing money, and central-bank rates are among the biggest drivers of currency and market moves.

Rising rates tend to strengthen a currency and pressure stocks; falling rates often do the reverse. Rate decisions and the language around them are top-tier events on any economic calendar.

The information on Trding.io is for general information only and is not investment advice. Trading involves a real risk of losing money, and most retail traders lose. Never trade money you cannot afford to lose.

Related terms

Economic calendar
A schedule of upcoming data releases and events that can move markets.
Fundamental analysis
Assessing an asset's value from economic and financial data.
Carry trade
Profiting from the interest-rate gap between two currencies.
Forex (FX)
The global market for trading one currency against another.
Currency pair
Two currencies quoted together, showing the price of one in the other.
Base currency
The first currency in a pair — the one being priced.

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