What Is Rate Protection?

The annual interest rate is the one-year deposit rate. The so-called interest rate is the abbreviation of "interest rate", which refers to the ratio of the amount of interest to the principal of the deposit or the principal of the loan within a certain period. Usually divided into three types of annual interest rate, monthly interest rate and daily interest rate. The annual interest rate is expressed as a few percent of the principal, the monthly interest rate is expressed as a few thousandths, and the daily interest rate is expressed as a few thousandths.

Annual interest rate

Central bank policy

Generally, when the central bank expands

Year

For example: deposit 100 yuan,

Interest rate payable by the bank 4.2% per annum

Then the bank will have to pay 4.2 yuan interest in the next year

The calculation formula is 100 × 4.2% = 4.2 yuan

The formula is: interest rate = interest ÷ principal ÷ time × 100%

Interest = principal × interest rate × time

= 100 × 4.2% = 4.2 yuan

Final withdrawal 100 + 4.2 = 104.2 yuan

The People's Bank of China has strengthened its use of interest rate instruments. Interest rate adjustments are frequent year by year, interest rate regulation is more flexible, and the regulation mechanism is becoming more and more perfect. With the gradual advancement of interest rate marketization, interest rate policy, which is one of the main means of monetary policy, will gradually transform from direct regulation to indirect regulation of interest rates. As an important economic lever, interest rates will play a more important role in the national macro-control system.

Since the reform and opening up, the People's Bank of China has strengthened the use of interest rate means. By adjusting the level and structure of interest rates and reforming the interest rate management system, interest rates have gradually become an important lever. In May and July 1993, the People's Bank of China raised the deposit and loan interest rates twice in response to the overheating economy and rising market prices at that time. In January and July 1995, they increased the loan interest rates twice. These adjustments were effective. Controlled the scale of inflation and investment in fixed assets. In May and August 1996, October 1997 and March 1998, in response to the macroeconomic regulation and control, which has achieved significant results and market prices have dropped significantly, the central bank reduced the deposit and loan interest rates four times in a timely manner to protect the interests of depositors. On the basis of this, it has a positive impact on reducing the interest burden on enterprises, especially large and medium-sized state-owned enterprises, and promoting the steady development of the national economy.