Many people can't understand why their loan interest rates are at this level. Today, we'll clarify this issue.

Simply put, the interest rate is the price of money. And how is this price set? There are two levels:

**First Level: The Government Sets the Benchmark**

The benchmark interest rate is determined by the government, serving as the anchor for the entire financial system. The central bank, as the executor, influences the entire market based on this benchmark rate.

**Second Level: The Market Determines the Actual Interest Rate**

However, the true long-term interest rate is decided by the market. Because there are countless participants in the market, everyone is voting with real money—where the returns are higher, that's where they go. The central bank can guide, but ultimately its influence is limited.

**The Central Bank is like the biggest player in this market**

Why is the central bank the biggest? Because manipulating market prices requires controlling a large supply and demand. The central bank holds the power to issue currency; it can release liquidity when needed or tighten it when necessary. This scale of power is enough to influence the entire market's price signals.

Essentially, interest rate fluctuations are just the market's fluctuations. The logic behind manipulating interest rates is similar to last year's events of manipulating potato prices—both involve changing prices by controlling supply and demand. The only difference is that the central bank manipulates the most important "market"—the financial market.