Interest rates are one of the most effective tools regulating the activity of people, and they are used by central banks. Such interest rates are used in most central banks as an instrument of monetary policy with a view of exercising control over low inflation rates and balanced economic growth. It also pre-qualifies such aspects as credit of the consumers, saving as opposed to spending, and self confidence in the economy. Published today, it consolidates policymakers’ and financial planners’ current understanding of how rate of interest influences consumer expenditure. This paper aims at presenting the analysis of how change in interest rate impacts on consumer’s confidence and credit avail ability and consumers’ probability to save or borrow. In this discussion, theoretical analysis and data, examples in tables and charts, explain the effect that these fluctuations have on gross spending in critical sectors such as housing, automobiles, and retail during growth or in a recession. The paper uncovers how the interactions with the policy intentions show that the coordinated approach posited principles of consumer sentiment and economic stability.

Bohan Li. The Impact of Interest Rates on Consumer Spending Behavior. Academic Journal of Business & Management (2024) Vol. 6, Issue 12: 77-83. https://doi.org/10.25236/AJBM.2024.061210.

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