Market interest rate refers to the interest rate determined by the relationship between supply and demand in the capital market. When funds are tight, supply is less than demand, and interest rates rise. Funds are loose, supply and demand are dry, and interest rates are falling.

On the other hand, interest rates can affect the supply and demand of funds and promote the balance between supply and demand of funds. When the supply of funds exceeds the demand, the market has surplus funds and the interest rate drops, the interest of fund suppliers will be reduced, which can encourage some money originally intended to be invested in the capital market to be used in other aspects.

At the same time, due to the lower interest rate, raising funds from the market to build or expand the original production or operation scale, the interest burden is reduced, and it is in a relatively favorable position, with more fundraisers and increased capital demand. This may gradually balance the supply and demand of funds in the market.

On the other hand, if the demand for funds in the market exceeds the supply and the interest rate rises, it will cause a series of opposite economic activities. That is, people squeeze out some funds from all sides to invest in the market in order to obtain more interest income; At the same time, due to the increase in the cost of raising funds, the profits that may be obtained from the use of such funds will be reduced, so as to raise funds from the market as little as possible to alleviate the shortage of funds.