What are the effects of Federal Reserve decisions on the economy?

What are the effects of Federal Reserve decisions on the economy?

Federal Reserve decisions, like interest rate changes, can influence inflation, employment, and overall economic growth.

How do interest rate hikes affect consumer spending?

Interest rate hikes typically lead to higher borrowing costs, which can reduce consumer spending and slow down economic activity.

What happens to the stock market when the Fed raises rates?

When the Fed raises rates, the stock market often reacts negatively as higher rates can reduce corporate profits and consumer spending.

Can you explain the relationship between the Fed and inflation?

The Fed aims to control inflation by adjusting interest rates; higher rates can help cool down an overheating economy.

What are some recent decisions made by the Federal Reserve?

Recently, the Fed has raised interest rates multiple times to combat rising inflation, aiming to stabilize the economy.