Multiple economic factors influence interest rates. Three types of interest rates, including real, nominal, and effective affect consumers' borrowing and investment choices. The nominal interest rate ...

Real interest rates are dictated by the rate of inflation. Higher inflation rates erode consumers’ purchasing power and the amount of interest earned from investments such as deposits.

The Federal Reserve in 2025 is in the midst of a rate-cutting cycle, but its rapid pace of rate increases in 2022 and 2023 ...