Tag: Federal Reserve

The federal funds rate, set by the Federal Reserve, influences borrowing costs across the economy. It’s the interest rate banks charge each other for overnight loans and operates within a target range (currently 4.25% to 4.50%, with an effective rate of 4.33%). When the Fed raises rates to combat inflation, borrowing becomes more expensive – impacting credit cards, mortgages, and auto loans. Conversely, lowering rates encourages spending and investment. Rising rates generally benefit