Interest rate adjustment refers to the process by which central banks, like the Federal Reserve, change the interest rates that influence borrowing and lending in the economy. When rates are lowered, it becomes cheaper for individuals and businesses to borrow money, which can stimulate economic growth. Conversely, raising interest rates can help control inflation by making borrowing more expensive. These adjustments are typically made in response to economic conditions. For example, if inflation is rising too quickly, a central bank may increase rates to cool down spending. Conversely, in a slowing economy, lowering rates can encourage more borrowing and investment, helping to boost economic activity.