The Fed And Interest Rates
Beginning of paper
Dave Pettit of The Wall Street Journal writes a daily column that
appears inside the first page of the journal's Money & Investment section. If
the headlines of Mr. Pettit's daily column are any accurate record of economic
concerns and current issues in the business world, the late weeks of March ....
Middle of paper
.... and V, P and Y can stabilize if they are increasing too
rapidly. The Fed does this by selling securities on the open market. This, in
turn, reduces bank's reserves and forces the interest rate to rise so the banks
can afford to make loans. People seeing these rises in rates will tend to sell
their low interest assets, in order to acquire additional money, they tend move
toward higher yielding accounts, also further increasing the rate. Soon this
small change by the Fed affects all aspects o ....
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Word count: 1144
Page count: 5 (approximately 250 words per page)
