What are interest rates?

You ask: What interest rate?

Neighbor borrow ten fish from Caveman today. Neighbor pay back eleven next moon. Extra fish is interest — price of borrowing. Rate is how big extra is: one fish on ten is ten in hundred. Why lender want extra? Caveman cannot eat lent fish, might never see them again, and fish worth less next year — inflation eat value. Extra pay for waiting and for risk. And extra stack on extra — lend at six in every hundred each winter, and a fish pile double in about twelve winters. Risky borrower pay bigger extra. Big money chiefs (central bank) set one base rate for whole land. When rate high, borrowing hurt — tribe borrow less, spend less, prices cool down. When rate low, borrowing cheap — tribe build huts, start hunts, spend big. Cave wisdom: interest rate is rent on money. High rent, money stay home; low rent, money run out and play.