How do interest rates set by central banks impact the broader economy and individual investments?

Interest rates set by central banks play a crucial role in the economy by influencing borrowing costs, consumer spending, and business investment. When rates are low, borrowing becomes cheaper, encouraging spending and investment, which stimulates economic growth. Conversely, higher rates make borrowing more expensive, potentially slowing down economic activity to control inflation. For individual investments, low interest rates generally make bonds less attractive, leading investors to seek higher returns in stocks or real estate. High rates, on the other hand, tend to reduce stock market growth while making bonds more appealing due to their higher yields.