Interest rates are determined in the bond markets.

Name: Interest rates are determined in the bond markets.
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Interest rates are determined by the supply and demand of bonds in the bond market. When there is high demand for bonds, their prices increase and their yields (i.e. interest rates) decrease. Conversely, when there is low demand for bonds, their prices decrease and their yields increase. Therefore, changes in bond prices directly affect interest rates.

Interest Rates Are Determined in the Bond Markets