Financial Markets and Interest Rates: an Analysis

Abstract

This article examines the intricate relationship between financial markets and interest rates, emphasizing their interdependence and the impact on economic stability and growth. Interest rates, set by central banks and influenced by market conditions, play a crucial role in determining the cost of borrowing and the return on investments. By analyzing historical data, market trends, and policy decisions, this study aims to elucidate how interest rates affect various segments of financial markets, including bonds, stocks, and derivatives. Furthermore, the article explores the mechanisms through which interest rate changes are transmitted to the broader economy, influencing consumer behavior, business investments, and overall economic performance.