Interest rate policies, implemented by central banks, are crucial tools for managing economic stability and influencing financial markets. This study explores the multifaceted effects of interest rate policies on various financial markets, including stocks, bonds, currencies, and commodities. When central banks adjust interest rates, they affect the cost of borrowing, consumer spending, and business investment, which in turn shape market dynamics. For instance, lower interest rates generally stimulate economic growth by reducing borrowing costs, leading to increased consumer spending and investment. This often results in higher stock prices as companies benefit from improved profitability and investors shift from low-yielding bonds to equities in search of better returns. Conversely, rising interest rates can dampen economic activity by increasing borrowing costs, leading to lower corporate profits and reduced stock valuations. The bond market is particularly sensitive to interest rate changes, as bond prices move inversely to yields. When rates rise, existing bonds with lower yields become less attractive, resulting in declining prices. This dynamic significantly impacts fixed-income portfolios, with implications for institutional investors and individual bondholders alike. Interest rate policies also influence foreign exchange markets. An increase in interest rates can attract foreign investment, leading to currency appreciation, while lower rates may cause depreciation. This relationship affects trade balances and the competitiveness of domestic industries on the global stage. In conclusion, interest rate policies play a pivotal role in shaping financial markets, affecting asset prices, investor behavior, and overall economic performance. Understanding these dynamics is essential for policymakers, investors, and financial analysts as they navigate the complexities of an interconnected global economy.