Interest Rates
How the Federal Reserve Sets Interest Rates
Explains how the Federal Reserve turns its target range for the federal funds rate into a real overnight rate using tools like IORB and repo facilities.
Interest Rates
Interest rates are the price of borrowing money, and they influence mortgages, car loans, credit cards, savings, and the cost of government debt. The Federal Reserve sets a short-term benchmark rate that ripples through the economy. The Fed is designed to be independent of day-to-day politics, so that these decisions can be made at a distance from elections.
People usually bring questions about how the Fed sets rates, who makes the decision, and how the chair's role works. They also ask how interest rates relate to inflation and unemployment, what the Fed's other tools do, and how rate choices affect household finances and the wider economy.
20articles
October 6last updated
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