Abstract

The interest rate has an important role to regulate the exchange rate affecting an economy and banking transactions between countries.The interest rate as a trigger factor of development of a country has a very important role to cope with the level of inflation and the exchange rate in the country. In this study, several factors are considered to influence the interest rates include inflation, and exchange rates. The method used is multiple linear regression with time series data. The study was conducted using monthly data from July 2005 until December 2012. The results of the regression carried out showed that indlasi positive and significant impact on interest rates. While the exchange rate and no significant negative effect on interest rates.

Keywords: Interest Rates, Inflation, Exchange Rate