The cost of borrowing money and the return for lending money. Interest Rates: The cost of borrowing money and the return for lending money.

The Bank of England

The effects of interest rate changes Changes in interest rates affect virtually every part of the economy – from homeowners with a mortgage, to business confidence, to the exchange rate and the prospects of UK exporting businesses

Higher interest rates: Who gains and who loses? A homeowner with a variable rate mortgage of £280,000 A pensioner couple who have paid off their mortgage and have some savings in a building society account A young married couple with few savings who find that they cannot afford to buy their first property A travel agent, 70 per cent of the holidays they sell are to British consumers to overseas destinations A manufacturer of kitchen units in the West Midland with a high level of bank loans Workers in a UK factory that manufactures and exports sports clothing to the United States

Go to: http://www.bized.co.uk/cgi-bin/ked/ked.pl What is the relationship between Interest rates and GDP Growth Interest rates and inflation

Interest Rates and Inflation The consensus view is that the Bank of England’s decisions on interest rates have been successful in keeping inflation within target range whilst at the same time allowing the economy to grow with sufficient strength for employment to rise and unemployment to fall

Interest rates and house prices

Evaluation: “it depends on…” The size of interest rate change Whether you are a saver or borrower The relative size of consumer income