Definition ∞ Interest rates are the cost of borrowing money or the return on lending money, expressed as a percentage of the principal amount. In monetary policy, central banks set benchmark interest rates to influence economic activity, affecting the cost of credit and the incentive to save or invest. They are a fundamental tool for managing inflation and economic growth.
Context ∞ Changes in interest rates, particularly those announced by central banks, are a significant factor discussed in crypto news due to their impact on investment flows and asset valuations. Higher rates can increase the attractiveness of traditional fixed-income assets, potentially drawing capital away from riskier digital assets, while lower rates may spur investment in assets like Bitcoin.
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