Interest rates are of utmost importance when deciding on the types of investments to make. While a diversified portfolio is always recommended, it is important to consider the applicable interest rates at the time. These are all in the hands of the central bank in question. With interest rates rises or cuts, the cost of lending and borrowing will vary and so will the types of asset's risk levels.

Yes, interest rates are a key factor when setting a portfolio because they influence asset prices, borrowing costs, and overall market sentiment. When central banks raise rates, bonds often become more attractive, while equities may face pressure due to higher discount rates on future earnings. Conversely, when rates fall, investors tend to favour riskier assets like stocks and crypto in search of higher returns. Understanding the interest rate cycle also helps in sector allocation, as financial stocks may benefit from rising rates, while utilities and growth sectors can perform differently. In addition, interest rates affect currency values, which is important for global portfolios. By monitoring monetary policy decisions, inflation data, and yield curves, investors can better position their holdings for changing economic conditions. Therefore, monitoring interest rates supports better allocation decisions, risk control and long-term portfolio performance growth stability outcomes.