Business, Legal & Accounting Glossary
The interest rate at which the supply for money meets its demand. The equilibrium rate of interest is used by central banks as a means of managing money supply. For instance, when there is an excess supply of money, the central bank raises the interest which encourages investors to put money into bonds. As the demand for bond rises, the interest rate goes down and eventually achieves equilibrium.
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This glossary post was last updated: 20th November, 2021 | 0 Views.