I learned that low fed interest rates makes ppl borrow more, stimulating economy as money circulation is higher. why ever increase it then, if increasing it worsens the econ?
Also ,is the fed reserve actually the goveernment bank? heard it was still a giant private bank and the goverment has nothing to do with it
In: Economics
A couple things… it can cause inflation by flooding the economy with more money. It takes away a key tool the Fed has for trying to stimulate the economy in an economic downtown. And low interest rates hurt people’s abilities to safely save. Your savings account or CD is getting hardly any interest, in fact it isn’t even keeping up with inflation. That can drive some to seek higher returns in the stock market, but say you’re saving up a house down payment or are 80 years old and retired you can’t take on such risk and are falling further behind.
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