I seem to have a misconception about what interest rates mean. On one hand, they signal how high a government's demand for money is, because if a government is ever in any serious need of money, they can sell bonds with a high enough coupon rate to ensure that investors will quickly buy them, which will have the knock on effect of raising interest rates. On the other hand, I hear that government will frequently increase/decrease interest rates in order to discourage/encourage consumer spending (although, frankly, I've got no idea how the governments go about changing these rates).

So, put bluntly, what do interest rates actually mean? If we take for example the UK, I've never heard anyone claim that the interest rates are low because the government is in no real need of money, but I have frequently heard that the interest rates are low because the government wants to encourage consumer spending. What should be read in to that?