Einar H. Dyvik
Research expert covering Nordics and global data for society, economy, and politics
Interest Rates - Statistics & Facts
Interest is the amount charged for the use of an asset on top of the amount of money owed to a creditor. It is most commonly paid by borrowers as the cost of taking out a loan, or by financial institutions as a reward to those depositing money. The amount borrowed is referred to as the principal, with the interest rate being a certain percentage of this amount charged at the end of each period, usually one year. Interest rates are a key factor in determining the supply and flows of money and credit in the economy. Higher interest rates tend to encourage savers to deposit money in financial institutions, while discouraging borrowing due to the increased cost of credit. On the other hand, lower interest rates tend to stimulate extra economic activity by encouraging companies and individuals to borrow, while providing incentive for savers to move their funds from bank deposits into financial assets with higher returns, such as stocks or bonds.
