US Interest Rates
What are Interest Rates
Interest rates are the prices charged by lenders when they loan money to borrowers. In the United States, interest rates are set by the Federal Reserve Board (FED).
The Federal Reserve Board sets the federal funds rate, which influences the cost of borrowing money for individuals and businesses. It is important to learn how interest rates affect the economy and how they influence the stock market.
Learn what they are, how they work, and why they matter
Interest rates are the price at which banks lend money to each other overnight. They also determine the prime lending rate, which is the rate at which commercial banks lend money to large corporations. These two rates together form the base rate, which is the benchmark for short term loans such as credit cards and personal loans.
Why Do They Matter?
Interest rates affect everything from home mortgages to credit cards to car loans. If interest rates rise, people with outstanding debt will find themselves paying more to service their debts. That means less money available for spending on other things. On the flip side, if interest rates fall, people who owe money will see lower payments.
They also influence the prices of stocks and bonds. If you invest in stocks, you will need to understand what the current interest rates are so you can make sure you are getting the best return possible.