If you were to ask most people, what's an interest rate? They'd answer that it's the price to borrow money. They wouldn't be wrong, but they'd be incomplete. Interest rates are more than the price to borrow money. In fact, there would be interest rates even if there were no money and we all bartered.

More than anything, interest rates allocate. Specifically, they allocate resources between present consumption and future consumption. Everyone prefers a present good to a future good. If someone offered you 10 apples today or 10 apples a year from now, you'd take the 10 apples today.  But if someone offered you 10 apples today or 12 apples a year from now, you'd take the 12 apples if your required rate of return was 20% or less. 

Higher interest rates encourage consumers to forgo current consumption and to lend to producers so that they can produce goods for future consumption. Lower interest rates encourage the opposite; they encourage consumers to consume more today. 

Perpetually low interest rates would seem to be a perpetual positive, but that's not necessarily so. More consumption today can lead to less consumption tomorrow. This is something worth remembering as the Fed continues to hold interest rates at unprecedentedly low levels.

 Information provided by Jessica Regan.

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