Floating interest rates are a way for the central bank to adjust monetary policy, and they also reflect changes in money supply and demand. You don't have to worry about these. The central bank will have a base interest rate (equivalent to a fixed rate). The floating interest rate is relative to the base interest rate. It floats up and down around the base interest rate. Generally, the floating interest rate can be about 20% higher than the original base rate when going up, and about 10% lower when going down.
A floating interest rate is an interest rate that can be adjusted periodically during the loan period. Often calculated using a base interest rate plus. According to whether the interest rate level changes during the duration of the monetary capital lending relationship, interest rates can be divided into fixed interest rates and floating interest rates.
Floating interest rate refers to an interest rate that adjusts accordingly with changes in prices or other factors during the loan period. Borrowers and borrowers can stipulate that the interest rate can be adjusted according to factors such as commodity prices or other market interest rates when signing a loan agreement. Floating interest rates can avoid some of the disadvantages of fixed interest rates, but the calculation basis is diverse and the procedures are complicated.
The method that China once implemented to subsidize the value of medium and long-term savings deposits is a form of floating interest rate system.
The interest rate can be adjusted at any time according to changes in market interest rates. Often calculated using a base interest rate plus. Usually, the borrowing interest rate or commercial paper interest rate of the most reputable companies in the market is set as the basic interest rate, and 0.5 to 2 percentage points are added to this as the floating interest rate. The principal will be repaid at face value upon maturity, and interest will be paid at floating interest rates according to the prescribed interest payment period.
An interest rate stipulated by banks and other financial institutions that fluctuates up and down within a certain range with the base interest rate as the center. If the interest rate is higher than the benchmark interest rate but lower than the highest range (including the highest range), it is said that the interest rate is rising; if it is lower than the benchmark interest rate and higher than the lowest range (including the lowest range), it is said that the interest rate is falling.
In Western countries, the base interest rate is the interest rate used for loans with the least risk and the most liquidity. Within the range of the highest and lowest floating interest rates, the interest rate increases of various banks vary. In China, the People's Bank of China authorizes a certain level of bank, branch or specialized bank to fluctuate up or down the legal interest rate level and within the prescribed range according to different circumstances. The purpose is to give full play to the economic leverage of interest rates in order to balance normal capital needs with abnormal ones. distinguish the capital occupation, and combine the interest rate leverage with the credit principle of "differential treatment and selective support". In 1987, the loan interest rate for working capital fluctuated within a range of 20%, and in 1988 it was expanded to 30%. The loan interest rate for almost all items of working capital and fixed assets can be raised. In February 1990, it was stipulated that only the interest rate on working capital loans could be raised by 20%. Starting from March 21 of the same year, the working capital loan interest rate can not only increase by 20%, but also decrease by 10%, and can be implemented after approval by the local People's Bank of China. Floating interest rates are generally divided into two types. One is the interest rate floating right held by the People's Bank of China within a certain range under the authorization of the State Council. For example, the interest rates on infrastructure loans for 13 industries such as energy, transportation, communications, salt industry and agriculture were divided into three categories and dropped by 10, 20 and 30 respectively. The other is for specialized bank branches to fluctuate the loan interest rate up or down within a specified range based on the credit and efficiency of the enterprise requesting the loan, in order to promote the enterprise to strengthen its business management, accelerate capital turnover, and improve the economic benefits of the enterprise.
In China, floating interest rates have become an important part of the interest rate system. The types of implementation are: ① urban and rural credit cooperative loan interest rates; ② the flow of various professional banks and other financial institutions (excluding urban and rural credit cooperatives) Fund loan interest rate; ③ The rediscount rate of branches in provinces, autonomous regions, municipalities directly under the Central Government, cities under separate state planning and pilot cities for financial system reform to the local People's Bank of China can fluctuate up or down by 5 to 10% based on the interest rate of the same grade; ④ Local corporate bonds of each grade can be compared The interest rate of savings deposits of the same grade has increased by 40% before 1991, and has increased by 20% since 1991; ⑤ The interest rate for fixed-term and live-living savings is calculated at a 40% discount on the interest rate of regular lump sum deposits and lump sum withdrawals for the same period; ⑥ Large amounts issued by individuals can be The interest rate for transferable time deposit certificates shall be raised based on the interest rate for regular lump sum deposits and withdrawals during the same period; ⑦ The interest rates for overdue loans and misappropriated loans shall be raised by 20% and 30% respectively based on the original interest rates.
Interest rate floating ratio = floating interest rate/base interest rate-1