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Will your savings account's rate change if the Fed hikes or cuts rates? What you should know

The Federal Reserve influences bank accounts and the broader economy through its monetary policy tools, primarily by setting the federal funds rate, which is the interest rate at which banks lend to each other overnight. Adjustments to this rate can lead to changes in interest rates for savings accounts, certificates of deposit (CDs), and loans, affecting consumers' saving and borrowing costs. For instance, when the Fed raises rates, banks typically increase rates on savings accounts and CDs, making saving more attractive, while also raising borrowing costs, which can slow down economic activity. Conversely, lowering the federal funds rate can stimulate economic growth by making borrowing cheaper, encouraging spending and investment. Additionally, the Federal Reserve's actions impact inflation, employment, and overall economic stability, which indirectly affect the value and purchasing power of money in bank accounts.

Read the Full Fortune Article at:
[ https://fortune.com/article/how-the-federal-reserve-impacts-bank-accounts/ ]