Interest rates impact government economic policy by influencing borrowing costs for consumers and businesses. When interest rates are low, borrowing becomes more affordable, spurring investments and consumer spending, which can stimulate economic growth. Conversely, high interest rates may lead to reduced spending and borrowing, slowing economic activity. Central banks often adjust interest rates in response to inflation or recessionary pressures, tying these decisions to broader economic goals. The interplay between interest rates and fiscal policy reflects a government’s strategy to manage economic stability and growth within the financial system.