Interest rates are set by the Central Bank or by governments, and are a very important monetary policy tool. Moreover, interest rates are strongly linked to inflation and unemployment.
Why are banks lowering interest rates?
Banks lower interest rates when they want to increase economic activity in the country, increasing both investment and consumption. This way, taking out loans becomes more attractive.
Why are banks raising interest rates?
Banks can also increase interest rates, which makes taking loans less attractive. This is often associated with their interest in reducing economic activity, which has caused inflation to increase.
Interest rate analysis is one of the key elements of fundamental analysis. If you want to learn more about the topic, we recommend reading this article on fundamental analysis.