Interest Rate
Interest Rates are a tool at the
central bank’s disposal used to accomplish certain fiscal goals.
By opting to increase interest rates, for example, the Federal
Reserve is altering the cost of lending and borrowing money in a way
that would make consumers less likely to spend and more likely to
save, slowing down economic productivity and growth.
Fundamental Analysis of the Interest Rate
Interest rates play an important role in fundamental analysis. An
increase in interest rates can typically increase the value of a
currency; foreign investors must purchase the local currency in
order to take advantage of favorable interest rates, thereby
increasing demand and price.
