Current Economic Climate

Facing the current economic climate in the US, the Federal Reserve, for the past twelve months, has dropped interest rates in an effort to encourage spending and stimulate the economy in general. After losses for the past quarters and the events of September 11th, the country has driven right into a recession. Since interest is the price of money, the Federal Reserve lowers interest rates so people and businesses have the incentive to spend money, …

…Reserve has lowered interest rates to unprecedented and never before seen numbers. Rates have fallen from 6.50% to 1.75%. According to the article, this approach has brought tens of million of dollars of spending, generally in vehicle and home sales. Whether faced with a recession, like the current one, or a growing economy with inflation, the Federal Reserve has the ability to manipulate interest rates to lead the economy in the direction that most benefits the country.