How do interest rates affect the economy and personal finances, especially when central banks raise or lower rates?

Interest rates play a crucial role in the economy and personal finances. When central banks raise rates, borrowing becomes more expensive, which can slow down consumer spending and business investment, potentially leading to economic cooling and lower inflation. Conversely, when rates are lowered, borrowing becomes cheaper, encouraging spending, investment, and economic growth. For personal finances, higher rates mean higher mortgage, loan, and credit card payments, while lower rates make borrowing more affordable. Individuals might also see changes in savings account interest, with higher rates offering better returns and lower rates providing less incentive to save.