ECONOMY
Interest Rates
How benchmark rates move, why they change, and what higher or lower rates mean for loans, savings, and investments.
Interest rates represent the cost of borrowing money or the return earned on savings, and in the U.S. they're anchored by the federal funds rate — the rate the Federal Reserve sets for banks lending to each other overnight. Changes to that benchmark ripple outward to mortgage rates, credit card APRs, auto loans, savings account yields, and bond prices, though not always by the same amount or on the same timeline. The Fed raises rates to cool inflation by making borrowing more expensive and saving more attractive, and cuts rates to stimulate growth when the economy is slowing — a balancing act reflected in every FOMC meeting.
