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Interest rates are typically set by a variety of entities, including:
Interest rates are foremost negotiated between the borrower and the lender, however the central bank interest rate offers an attractive competitive option to lenders such as banks and financial institution because the interest gained by depositing the money at the central bank is risk-free. There is no chance of default. That’s why lenders will typically set a premium for borrowing to entities or individuals as they run the risk that the entity or individual would not repay them.
The effects of interest rates are often not directly felt but play out over a long time as valuations of real-estate and other assets adjust.
At Horizon65, we created a mobile app that enabled you to check the effect of high interest rates on your savings and to simulate potential investments that can defend against it.