Dec
29
Ever wondered why the interest rates are not constant? Well here is the answer. A few factors influence the interest rates. The most important among them are the inflation and liquidity.
Inflation is one of the important factors for the interest rates to go up. When inflation rises, bank has no other option to counter them, but to hike the interest rates. If there is a decrease in inflation, the interest rates go down. They operate almost as a directly proportional relationship.
Market liquidity is a business, economics and investment related term. It measures an asset’s ability to buy or sell itself with least fuss or most ease. Market liquidity directly influences the interest rates, as more the liquidity, lesser the interest rates, and a decrease in liquidity brings an increase in the interest rates.
There are some simple reasons too: your location, amount you are taking as loan, the tenure of the loan, the bank from where you took the loan and time of the year also.
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