The Federal Reserve Interest Rate is the interest rate that the Federal Reserve sets in order to guide bank-to-bank loans. This rate, however, has an impact in many aspects of the US economy, including the finances of the regular person.

The Federal Reserve (aka the Fed) has authority over other US banks and financial institutions and can regulate them. Its most known function is to set its interest rate, otherwise known as the Federal Funds Rate or Federal Reserve Interest Rate.

The Federal Reserve Interest Rate is not directly tied to consumer interest rates (mortgage rates or credit card interest rates). But it can have an influence on those interest rates. It can impact how individuals and businesses can access credit lines.

Federal Reserve Interest Rate changes are made by "the Fed" based on some important economic indicators that can show signs of recession, changes in consumer's price index, or other situations that are related to economic growth.

This post is intended to only raise awareness. In order to make actual financial decisions please contact your financial advisor and/or tax advisor prior to making the decision.