When interest rates change , there are real-world effects on the ways that consumers and businesses can access credit to make necessary purchases and plan their finances. Here are some reasons for change in interest rates:- Central banks cut interest rates when the economy slows down in order to re-invigorate economic activity and growth. The goal is to reduce the cost of borrowing so that people and companies are more willing to invest and spend. Interest rate changes spill over to many facets of the economy, including mortgage rates and home sales, consumer credit and consumption, and stock market movements. Impact of a Fed Interest Rate Change: Savings: In theory, that should boost savings among consumers and businesses as they can generate a higher return on their savings. On the other hand, the effect may be that anyone with a debt burden would instead seek to pay off their financial obligations to offset the higher variable rates tied to credit cards, home loans, or other debt i...
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