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
It’s an effort to minimize inflation. As the circulation increases, prices also creep up as demand rises due to the additional parties being able to afford more. That’s all well and good for those who are making more money, they can weather it, but the rest of the country struggles as they’re able to afford less and less on the same amount of money. A small bump in interest rates can encourage more saving and investing, slowing the circulation of money and thus demand, keeping inflation to a minimum.
Latest Answers