Macroeconomic Factors Affecting a Business There are macroeconomic factors that affect a business and their implications need to be considered when planning ahead. The interest rate is basically the cost of borrowing, the price of money. If money is borrowed, it is the percentage in excess of the original loan that must be repaid. The interest rate is a vital economic management tool for the government. Interest rate adjustment is a key part of the government's monetary policy. Interest rates are set by the Monetary Policy Committee of the Bank of England. They will set the rate based on the prevailing economic conditions and the inflation target that have been set. If they believe there are significant inflationary pressures in the economy, then they will tend to raise the level of interest rates; this is the case of PotArts ltd. Interest rates are expected to rise as indicated in the forecast figures. This will tend to discourage indebtedness and slow down economic growth. In the future Mari...