A decrease in investor sentiment will always lead to a proportional decrease in interest rates in the loanable funds market.

A decrease in investor sentiment means that investors feel less confident about the economy and are less willing to invest their money. When this happens, they tend to save more instead of lending out their funds, which can lead to a decrease in the demand for loans. As the demand for loans decreases, banks and financial institutions may lower interest rates to encourage borrowing again. For example, if a company is planning to build a new factory but feels uncertain about the future, it might hold off on taking a loan, which could lead to lower interest rates in the market. However, this relationship is not always proportional, as other factors can also influence interest rates.