: What factors determine interest rates?

When we talk of interest rates, there are different types of interest rates – rates that banks offer to their depositors, rates that they lend to their borrowers, the rate at which the Government borrows in the Bond/Government Securities market, rates offered to investors in small savings schemes, rates at which companies issue fixed deposits etc.

The factors which govern these interest rates are mostly economy related and are commonly referred to as macroeconomic factors. Some of these factors are:>> Demand for money>> Level of Government borrowings>> Supply of money>> Inflation rate

>> The central bank in respective country and the Government policies which determine some of the variables mentioned above