answersLogoWhite

0

In reality, the Fed does not lower interest rates. It lowers the rate charged to banks to borrow money. This usually results in a lowering of commercial rates.

User Avatar

Wiki User

10y ago

What else can I help you with?

Continue Learning about Economics

If the fed increases the money supply what will happen to interest rates?

when money supply is increased, interest rates decrease


How are bond prices affected when the Federal Reserve lowers the interest rate?

When the Federal Reserve lowers interest rates, the value of outstanding bonds will increase. The increase in the value of bonds is due to the market price of the bonds adjusting to reflect the lower interest rates available on new bonds. Investors with bond holdings enjoy an increase in the value of their holdings when the Fed cuts rates. However, new investors in bonds will receive a lower rate of interest and if the Fed later raises rates, bond investors will experience a decrease in the market value of their bonds.


How does the Fed influence interest rates?

The Federal Reserve controls the interest rate at which federal banks lend money. This, in turn, has a cascading effect, in which other banks interest rates are determined based on the rate set by the Fed.


If Central wants to achieve lower nominal interest rates it has to raise the nominal interest rates.?

The statement is contradictory; if a central bank wants to achieve lower nominal interest rates, it should lower its policy interest rates rather than raise them. By decreasing rates, the central bank can stimulate borrowing and spending, which can help lower overall nominal interest rates in the economy. Raising nominal interest rates would typically tighten monetary policy and could lead to higher borrowing costs. Therefore, to achieve lower nominal interest rates, the central bank should take actions that promote lower rates, not raise them.


When the federal reserve board lowers interest rates it most likely attempting to?

lower interest rates.

Related Questions

How does the Fed implement interest rate cuts Or How does the Fed force all banks to lower their interest rates?

monetary policy


How does the Fed influence banks to lower the interest rate they charge for lending money?

The Fed influences banks to lower the interest rate they charge for lending money by adjusting the federal funds rate, which is the interest rate at which banks lend to each other. When the Fed lowers the federal funds rate, it becomes cheaper for banks to borrow money, leading them to lower the interest rates they charge for lending to customers.


If the fed increases the money supply what will happen to interest rates?

when money supply is increased, interest rates decrease


Who sets the interest rates in the US.?

The Federal Reserve (The Fed)


Who regulates interest rates on all types of credit?

the fed


How are bond prices affected when the Federal Reserve lowers the interest rate?

When the Federal Reserve lowers interest rates, the value of outstanding bonds will increase. The increase in the value of bonds is due to the market price of the bonds adjusting to reflect the lower interest rates available on new bonds. Investors with bond holdings enjoy an increase in the value of their holdings when the Fed cuts rates. However, new investors in bonds will receive a lower rate of interest and if the Fed later raises rates, bond investors will experience a decrease in the market value of their bonds.


How does the Fed influence interest rates?

The Federal Reserve controls the interest rate at which federal banks lend money. This, in turn, has a cascading effect, in which other banks interest rates are determined based on the rate set by the Fed.


Would a short term monetary policy take most action in lower interest rates?

lower interest rates


How do people acquire building loans at lower interest rates?

People can get loans to purchase buildings with lower interest rates by shopping around for a good bank. You can also get lower interest rates by having good credit.


Who sets national interest rates in the US?

The Federal Reserve (The Fed)


If Central wants to achieve lower nominal interest rates it has to raise the nominal interest rates.?

The statement is contradictory; if a central bank wants to achieve lower nominal interest rates, it should lower its policy interest rates rather than raise them. By decreasing rates, the central bank can stimulate borrowing and spending, which can help lower overall nominal interest rates in the economy. Raising nominal interest rates would typically tighten monetary policy and could lead to higher borrowing costs. Therefore, to achieve lower nominal interest rates, the central bank should take actions that promote lower rates, not raise them.


How do rates for high yield CDS today compare with a decade ago?

Current interest rates are far lower than they were during good economic climates. When the economy is bad the FED lowers interest rates to encourage economic activity. In good times they raise rates to keep inflation under control.