4. What are interest rates? Interest rates represent the cost of borrowing money. Low interest rates encourage both individuals and businesses to borrow and spend money. This increases the overall level of demand in the economy and helps to raise employment levels.
Interest rate trends in Ireland
7 8 5 4 3 2 1 0
1975 1980 1985 1990 1995 2000 2005 2010 2015 2020
Interest rates are determined by the supply and demand of money in a country. The supply of money is controlled by the Central Bank which is responsible for printing and minting currency notes and coins.
Since 1999 when Ireland gave up its own currency and joined the euro, minimum interest rate levels are set by the European Central Bank. This means that the Irish government has no infl uence over these interest rates.
Signpost: See Chapter 22: Globalisation and the EU for more information on the ECB and the Eurozone.
