A registered representative for Centaurus Financial, Atul Makharia works in the firm’s branch in Lexington, South Carolina, as senior vice president of investments. In this capacity, Atul Makharia creates tactical and individualized portfolios for clients that incorporate everything from stocks and 401(k) investments to changes in Federal Reserve interest rates.
The Federal Reserve is tasked with maintaining financial and economic stability in the United States. To maintain this balance, it raises or lowers interest rates according to inflation data, employment, and other economic indicators. This rate-setting is overseen by the Fed’s Federal Open Market Committee (FOMC), a group of officials who meet eight times during the year to discuss interest rates.
When the economy has slowed, the Fed will usually lower interest rates. By doing so, it encourages more people to borrow money for home improvement or automobiles, entices them to get a mortgage, and encourages businesses to borrow funds for expansion or hiring processes. Such changes promote economic growth and encourage people to spend more of their money. Lowering interest rates can also reduce monthly interest and payments for credit cards, thus ensuring consumers have more money in their budgets to spend.
Conversely, the Fed increases interest rates when it appears the economy is growing too quickly. As a result of this increase, consumers and businesses are more cautious about borrowing money, and will often hold off on making major financial decisions. This does not mean that higher interest rates are always bad, though. In fact, they can be very beneficial to people’s savings, since certificates of deposit (CDs), savings accounts, and money market accounts may gain more interest when the Fed raises its rates.
The Federal Reserve is tasked with maintaining financial and economic stability in the United States. To maintain this balance, it raises or lowers interest rates according to inflation data, employment, and other economic indicators. This rate-setting is overseen by the Fed’s Federal Open Market Committee (FOMC), a group of officials who meet eight times during the year to discuss interest rates.
When the economy has slowed, the Fed will usually lower interest rates. By doing so, it encourages more people to borrow money for home improvement or automobiles, entices them to get a mortgage, and encourages businesses to borrow funds for expansion or hiring processes. Such changes promote economic growth and encourage people to spend more of their money. Lowering interest rates can also reduce monthly interest and payments for credit cards, thus ensuring consumers have more money in their budgets to spend.
Conversely, the Fed increases interest rates when it appears the economy is growing too quickly. As a result of this increase, consumers and businesses are more cautious about borrowing money, and will often hold off on making major financial decisions. This does not mean that higher interest rates are always bad, though. In fact, they can be very beneficial to people’s savings, since certificates of deposit (CDs), savings accounts, and money market accounts may gain more interest when the Fed raises its rates.
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