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Federal Reserve's Procedure On Interest Rates Affects You And Business

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The Fed can lower banks' reserves meaning banks would be required to carry less money on their books and can loan out more to businesses and consumers along with other banks. This approach increases the money supply in the economy. The Federal Open Market Committee meets eight times per year to place key interest rates and to choose whether to increase or decrease the money supply which the Fed does by buying and selling government securities. To comprehend how the Federal Reserve's procedure on interest rates affects you and your business, you should first understand what the Fed is trying to do. The objectives of the Fed’s monetary policy are to encourage sustainable growth in the U.S. economy, support high employment, and keep prices stable.

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