How Interest-Rate Hikes Actually Work

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For years, everyone involved with investing has wanted to know: When will the Federal Reserve raise interest rates?

But there’s another important consideration that isn’t asked nearly enough: Can the Fed raise interest rates?

That query is more than academic. With the U.S. economy looking increasingly strong, some still think the Federal Reserve could act to raise rates after its monetary policy committee, the Federal Open Market Committee, meets this week.

Such Fed rate increases used to be commonplace. But those days are long gone. It’s been roughly nine years since the U.S. Central Bank last ratcheted up its once primary policy rate, known as the Fed funds rate.

 

By Matt Phillips
Picture: The Atlantic
View full story on The Atlantic.

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