Interest Rates Federal Reserve
Interest rates are a crucial aspect of monetary policy and play a significant role in the economy. The Federal Reserve, also known as the central bank of the United States, has a significant impact on interest rates. The Federal Reserve handles setting monetary policy, including the setting of interest rates, to maintain stable prices and maximum employment in the economy. Interest rates are the cost of borrowing money, and the Federal Reserve uses them as a tool to influence the economy. When the Federal Reserve increases interest rates, borrowing becomes more expensive, leading to a slowdown in economic activity and lower inflation. Conversely, when the Federal Reserve reduces interest rates, borrowing becomes less expensive, stimulating economic activity and potentially leading to higher inflation. The Federal Reserve sets interest rates through a process known as the federal funds rate. The federal funds rate is the interest rate at which banks can lend money to each other overnigh...