How the Fed Steers Interest Rates to Guide the Entire Economy | WSJ

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The Federal Reserve’s main tool for managing the economy is to change the federal funds rate, which can affect not only borrowing costs for consumers but also shape broader decisions by companies like how many people to hire. WSJ explains how the Fed manipulates this one rate to guide the entire economy. Illustration: Jacob Reynolds

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27 COMMENTS

  3. Isn’t the first time the feds cut rates in 2019 they cut it 3 times look where we are now just making it with cost of living no where to wages. The fact they want to buy time so the market crashes after March 11 and beyond is no purposely put trump in a position if he wins to be blamed for a sudden downturn of the economy eventually crash.

  5. I'm considering a review of allocations on my 7-figure portfolio, particularly in light of the pause in interest rate hikes. I'm eyeing some high-risk, high-reward opportunities. Crypto and emerging markets seem intriguing. Anyone else exploring these?

  15. Well, i do have my reservations about the economic crisis. Wall Street pitched so-called quality stocks with high profitability and low debt, as a kind of insurance against whatever the economy might throw at you. Quality stocks have underperformed the S&P500 this year, My $650K portfolio is down by approximately 20%, any recommendations to scale up my ROI before retirement will be highly appreciated.

  22. the shell game 101.. inflation will only subside if wall street crashes… CEOs and corporations are responsible for inflated prices because their bonuses are based on profits while reducing operating costs that keeps benefits and salaries low.. deregulation gives these ruthless corporations and CEOS the green light to overrun the masses. back in the ol days the government fought corporate minopolies now he corporations have their henchmen politicians passing laws that perpetuate big biz ripoffs and political backoor schemes .in the past shortages would drive up prices only for a while till production increase returned prices to normal now wall street corporations and speculators are driving inflation… increasing interest rates is just a smoke screen to draw sharks away from a runaway speculative bunch whose $$$ prop up prices until we have a recession and people stop buying.

  23. How wrong can this video be? Discount rate is not the same as IORB. If you want to make a video, make sure you have the basic concepts straightened out first. The fed funds ceiling is set by discount rate not IORB. Totally wrong on elementary stuff. 😂

  24. Usually during this time of the year, we get to see certain stocks go up in the market, but that’s very unlikely this season cos of the recession and overall economic crisis, issue is I've been holding a lot of stocks hoping to sell for profit this month but I'm not sure if to keep holding or sell, I’ve been running at a loss since Q2 and 2023 is really not looking favorable for investors. The market hasn’t been looking good since COVID, and it will get worse 2023, you should sell.

  25. GOVERMENT FAILURES CAUSED UNRECOVERABLE DAMAGES – I purchased my first home in 2004 when the newspapers were saying that the prices will double in 10 years but 15 years have passed and the home prices did not recover; because of government failure to regulate we had the housing bubble; in 2019 news papers were saying that recession in inevitable and overdue so I put my house on market and after nearly 11 months it sold with a 30% loss in March 2020 when the pandemic hit; I moved to another state and I slowly put the money to stock market; because of the government stimulus packages stock market soared and I made some money for which I paid taxes but than again due to the government actions I lost more than I earned in the stock market; 2022 was the fist year when my wife had jobs for the full year; I sold most of my stocks in 2022 expect few, and I am looking for home to buy the home prices in South Florida are still 60%-90% above 2019 prices; BIDEN says he will build 1mln affordable homes (1mln is not even enough); I saw some price drops but some homes are still listed 90% above 2019 prices. I just saw Dr Horton increase their home price for summer delivery by 7-8% vs homes with delivery for March-April in Plant City, FL; after reviewing IRS tax books I found out I can only offset $3,000 in capital losses from my income for the tax purposes; well in that rate I will die before I will be able to deduct the capital losses suffered in 2022; I also can't buy a home now because they are too expensive. It all failure of Government; it is getting worse and worse.

  26. I'm surprised there aren't more comments that are critical of the fed's actions. They are raising interest rates because they think that inflation is caused by the economy going "too fast" or sometimes because the economy is too "hot". Are they kidding? The economy is shrinking in all kinds of ways. Failure rates of business are skyrocketing.
    It's obvious rate increases will not help. Inflation in the important things like food and fuel and rent, will all continue.

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