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Saturday, September 19, 2015

The biggest economic decision of the year, explained

Sometime this year, the Federal Reserve is likely to do something it hasn't done in nearly 10 years: raise interest rates. The decision, which could come as soon as Thursday afternoon, sounds wonky, but it is momentous for the nation's economy. Whether the Fed acts Thursday or later this year, as many expect, hiking rates would mark the end of an historic effort to lift growth and create jobs -- an effort that has had decidedly mixed results. Unemployment is down, but workers aren't getting meaningful raises, and there's still a general sense that the economy isn't as strong as it could be.

When the Fed does move to raise interest rates, the cost of all sorts of other loans, from mortgages to credit cards, will likely also go up. Lending is the lifeblood of the economy, so any change could affect not just the price to borrow but the stock market, the jobs market and the value of the dollar. It will also mark a new chapter in the nation's economy, and a sign that nation's economic stewards believe it is relatively safe from the risk of a sudden downturn. Not everyone agrees, however.

Understanding what the Fed is, and why the Fed does what it does, can be pretty complex. Here's what you need to know.

What exactly is the Fed?

1 comment:

Anonymous said...

What is the name of the yellow flowers that is blooming on the side of the road and ditchbanks?