[eli5] Why is US federal interest rate highly important in the financial world?
In: 71
The US federal interest rate is highly important in the financial world because it serves as a benchmark for many other interest rates in the economy. When the Federal Reserve, which is the central bank of the United States, sets its target interest rate, it influences the interest rates that banks charge each other for loans, as well as the interest rates that consumers and businesses pay for various types of loans, such as mortgages, car loans, and credit cards. Additionally, changes in the federal interest rate can have a ripple effect on other aspects of the economy, such as inflation and employment levels. As a result, the federal interest rate is closely watched by investors, economists, and policymakers around the world, as it can signal important shifts in the global financial landscape.
Latest Answers