Interest rate is one of the most important variables in the economy; it affects virtually every sector from banks and financial services to business and consumers. An interest rate is the rate at which interest is paid by a borrower for the use of money that is lent by a lender.

The interest rate is the price of money, or the cost of borrowing money — either a bank loan or money in a savings account. This rate affects the amount of money an individual saves, borrows, and spends, and ultimately impacts the overall economy.

For example, when the interest rate rises, consumers and businesses are less likely to borrow money for purchases or investments, as the cost of borrowing goes up—and vice versa, when the rate drops, borrowing becomes more attractive. This can lead to an increase in consumption and investment, which stimulates economic growth and jobs.

Interest rates, however, can also have a negative impact on the economy - when rates are too low, it can lead to excess borrowing and speculation and put a strain on financial resources. This could then lead to inflation, as prices of goods and services begins to rise due to increased demand.

The Federal Reserve, or the Fed, has full control over the current interest rate. It can raise or lower it depending on economic conditions, or its objectives to promote economic growth and employment and to keep prices stable. The Federal Reserve seeks to implement the right balance of interest rates to ensure economic stability.

Overall, interest rates have a huge impact on economic development, both in the near-term and the long-term. Keeping proper control over the rate of inflation ultimately serves to create a healthy and growing economy. It’s important to take note of the current interest rate and its impact to understand where the economy is heading and make smart financial decisions.