Current Federal Reserve Chairperson Jerome Powell recently indicated that the Fed may soon cut interest rates for the first time since the start of the financial crisis in 2009. What would such a change in the federal funds rate mean for you?
In today’s world of 24/7 cable TV and Internet news, people are more likely to be knowledgeable about financial and economic matters than in past generations. For example, we would venture to guess that most people have at least heard of the Federal Reserve, or, as it is usually referred to, the Fed.
However, having heard of the Fed is quite different from understanding what the Fed actually does and how its actions influence our financial lives. Let’s explore the Fed’s role in the U.S. economy and how its actions affect the broad economy and interest rates in particular.
What is the Federal Reserve and what are its Main Tools?