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The Simple Guide to Interest Rates and Monetary Policy
On December 13th, the U.S. Federal Reserve raised the interest rates by a quarter point to 1.25 – 1.50 percent, marking an end to a year that’s seen three rate hikes already. This is a common occurrence, and central banks the world over adjust interest rates in order to affect the money supply. Depending on what the economic situation calls for, the interest rate may be raised, lowered, or kept stable, and these decisions form part of the overall monetary policy.
What is Monetary Policy
Monetary policy entails actions by central banks or other regulatory authorities that