An Examination of the Impact of Interest Rate Fluctuations on Economic Variables

Interest rate is one and even the most important macroeconomic variable through which monetary policy exert its impcts.Because of having significant impact on macrovariables such as volume of deposits, amount of Investment,rate of Inflation,asset prices,exchange rate and demand for money and capital flight etc, its determination need carefull study and prior evaluation of the sensetivity that these monetery variable show with respect to the interest rate.The wise management and determination of appropriate interest rate would have suitable impact on the economy and play an important role in directing capital towards full employment equilibrium. However, unwise decision in this regards, would disturb markets leading to either inflation, or deflation and or both, creating stagflation.In this study we examine the views expressed by experts and economists in order to analysis the impact of change in interest rate on economicparameters.It is hoped that with new research projects the extent and intensity of the impact of interest rate would be evaluated scientifically so that we can have an accorate and better picture of the economic performance.