In the international financial market, LIBOR is a widely used benchmark interest rate. LIBOR is usually used as a benchmark for commercial loans, mortgages and debt issuance. At the same time, the interest rate of floating rate long-term loans will also be determined on the basis of LIBOR. LIBOR is also the reference interest rate for many contracts. This is the interest rate involved when commercial banks trade dollars deposited in non-American banks in the London interbank market. LIBOR is the interest rate required by large international banks when they are willing to borrow from other large international banks.

Market interest rate is determined by the relationship between supply and demand in the capital market. Market interest rates often change due to changes in supply and demand in the capital market. With the market mechanism playing a role, the supply and demand of credit funds will gradually become balanced due to free competition. The market interest rate in this state is "equilibrium interest rate", and the official interest rate corresponds to the market interest rate. The official interest rate refers to the interest rate set by the monetary authorities. The monetary authority can be a central bank or a government department with actual financial management functions. The market interest rate generally refers to the London Interbank Offered Rate and the US Federal Funds Rate. The interest rate of China interbank lending market is also the market interest rate.

The interest rate of newly issued bonds is generally designed according to the market benchmark interest rate at that time. Generally speaking, the rise of market interest rate will cause the price of fixed-income products of bonds to fall, the stock price to fall, the real estate market and the foreign exchange market to fall, but the savings income will increase.

When the capital market is completely open, the management of interest rate is basically lifted, and funds are really regarded as commodities, the interest rate is determined by the supply and demand of funds in the market. Funds are tight, supply is less than demand, and interest rates rise: funds are loose, supply is greater than demand, and interest rates fall.

Put it down. Conversely, interest rates can affect the supply and demand of funds, and promote the balance of supply and demand of funds when the supply of funds exceeds demand. Due to the profitability of liquidity, market funds are redundant. When interest rates fall, the interest of fund suppliers will be reduced, which can encourage some funds originally intended to be invested in the capital market to be used in other aspects, such as increasing consumption, hoarding goods that can preserve value, expanding the production and operation of enterprises, and investing in stock and futures markets, so as to achieve the purpose of maintaining and increasing value and reduce the supply of market funds. At the same time, due to the lower interest rate, raising funds from the market for new enterprises or expanding the production or operation scale of existing enterprises, the interest burden is reduced, and it is in a relatively favorable position, with more fundraisers and increased capital demand.