INTEREST RATES PROFESSIONAL ENGLISH IN USE FOR FINANCE

 

PROFESSIONAL ENGLISH IN USE FOR FINANCE 24. INTEREST RATES

 

A Interest rates and monetary policy An interest rate is the cost of borrowing money: the percentage of the amount of a loan paid by the borrower to the lender for the use of the lender’s money. A country’s minimum interest rate (the lowest rate that any lender can charge) is usually set by the central bank, B Different interest rates The discount rate is the rate that the central bank sets to lend short-term funds to commercial banks. When this rate changes, the commercial banks change their own base rate, the rate they charge their most reliable customers like large corporations. This is the rate from which they calculate all their other deposit and lending rates for savers and borrowers.     EXERCISES 24.1 Match the words in the box with the definitions below. Look at A and B opposite to help you. creditworthy floating rate invest labour spread output solvency interest rate   1 the cost of borrowing money, expressed as a percentage of the loan 2 having sufficient cost available when debts have to be paid 3 paid work that provides good and services 24.2 Name the interest rates and loans then put them in order, from the lowest rate to the highest. Look at B opposite to help you. a _____________: a loan to buy property 9a house, a flat, etc.) b _____________: borrowing money to buy something like a car, spreading payment over 36 months c _____________: commercial banks’ lending rate for their most secure customers 24.3 Are the following statements true or false? Find reasons for your answers in A and B opposite: 1 All interest rates are set by central banks. 2 When interest rates fall, people tend to spend and borrow more. 3 A borrower who is very solvent will pay a very high interest rate.

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