Will Federal Reserve Bank raise interest rates? Why should it matter?

The Federal Reserve Bank of the United States (the Fed) has been hinting for the last several months that it will raise interest rates. The interest rate that would be raised is the federal funds rate.  The federal funds rate is the interest rate charged by a bank on an over-night loan  of funds to another bank. Low interest rates help improve bank balance sheets and banks’ capacity to lend.  “By keeping short-term interest rates low, the Fed helps recapitalize the bank system by helping to raise the industry’s net interest margin (NIM), which boosts its retained earnings and, thus, its capital.” (St. Louis Federal Reserve).

To help you understand the issues currently surrounding the ongoing trepidation of “Wall Street” to the Fed raising the federal funds rate, I’m including several links discussing the dilemma/situation.  The act of raising the federal funds rate is and will be a big thing because of our current economic situation and the longevity of time –almost ten (10) years! –since the federal funds rate was driven down to about zero percent! That’s why if  you have a savings account or a money money or a CD, that money is earning, or should I rather say NOT EARNING any real  interest for you.

Following are some websites to help explain the Why, Wherefore, What, and What if of the Fed manipulating interest rates via use of the federal funds rate.

Here’s the question “When will the Fed Raise Rates?” poised by Kevin Granville of the New York Times:  When will the Fed raise rates? There is also a very short video by  Andrew Sorkin, Aaron Byrd and Erica Berenstein located on that webpage.

The Fed has a Board of Governors (more about that in another post). This link refers to Dennis Lockhart, Governor of Atlanta Federal Reserve Bank. This article gives you an idea of the thinking involved in raising, lowering, or as in the past several years keeping the federal funds rate at a specific “rate.” This article appeared in the Wall Street Journal.

Finally, an article from the St. Louis Federal Reserve Bank entitled: Low Interest Rates have Benefits …and Costs. 

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12 thoughts on “Will Federal Reserve Bank raise interest rates? Why should it matter?

      1. What about completely ridding ourselves of a central bank altogether, throwing those criminals in prison, along with their accomplices, ridding ourselves of our debt, almost entirely, like before 1913, printing our own money and buying/collecting our gold back in order to go back to the gold standard (which has withstood all other currency fueled collapses)/greenbacks to right the wrongs that the Rothschilds, Rockefellers and others have purposely done to us?

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      2. You raise some interesting questions/situations. I was thinking of doing a posting on why the US went off of the gold standard. Maybe in the future I will do so. I don’t want to stray too far from staying with our current economic situations, events, and circumstances.

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      3. I believe Sweden was in the midst of doing so, Iceland is about to start. JFK was going to, that and his 20 minute State of the Union address where he exposed secret societies and said he was going to fully expose who they were got him killed.

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