If Interest rates just mean the bank are making more profit back doesn’t that mean they want them to be as high as possible? What incentivises them to reduce rates and make less money?
In: Economics
One way to think of it … the interest rate on a loan is the price for borrowing the money. And if you believe in demand curves … the higher the price for something, the lower the demand. So while any one loan might be more profitable for the bank, far fewer people will be seeking to “buy” one.
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