Interest Rate

The cost of borrowed money, expressed as a percentage for a given period, usually one year. Interest rates are considered by many to be key economic indicators. The Federal Reserve (The Fed), a government agency that oversees the national economy and sets monetary policies, regulates interest rates. The Fed may lower interest rates, making borrowing money less expensive, in an effort to stimulate growth in the economy, or may raise them, making borrowing money more expensive, in an effort to slow economic growth.