What Would Happen If The Fed Kept Rates Where They Are Today?

Assignment 5: CBS/AP Article
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Assignment 5: CBS/AP Article
What would happen if the Fed kept rates where they are today?
According to the latest assessments, the American economy has improved significantly and is projected to further grow by more than 4% in the concluded quarter (Ivanova 2018). Powel believes further rate increases will be beneficial for Americans. However, if the Fed decided to retain the current interest rates and the economy continued to flourish, Americans would pay fewer interest rates and as a result, increase the purchasing power. This would benefit business owners and farmers, encouraging them to invest more capital for their ventures. However, on the other hand, inflation would rise due to the strength of the economy and the availability of funds. If not addressed in the long run, the rising inflation rates would affect the purchasing power adversely. Furthermore, this would affect the stock and bond prices. The stock prices would naturally rise since businesses and consumers would increase their spending. The bond prices would also ris...