What does it mean when “Feds raise/interest rates”?

Question

I see economists talk about it all the time, But I don’t understand it..

In: 0

Answer 1

It means the federal reserve bank has decided that you should pay more to take out a loan.

This is something the federal reserve typically does when unemployment rates stay below 4% for an extended period of time, and is expected to be that low for years to come.

Supposedly, but not always, this makes the principle price of things such as cars, houses, drop due to higher risk people not getting loans.