As the federal funds rate changes, other interest rates tend to move in the same direction.

Question

Quizplus · Accepted Answer

The federal funds rate influences other interest rates, including savings accounts, mortgages, and loans, because it affects the cost of borrowing money. When the federal funds rate changes, lenders adjust their rates to maintain competitive and profitable margins, leading other interest rates to generally move in the same direction.

As the Federal Funds Rate Changes, Other Interest Rates Tend