SREG Blog - Rates Up, Who's to Blame?
What is the Federal Reserve, and Who Makes Decisions?
You’ve probably heard that the Federal Reserve recently changed short-term interest rates. But who exactly is the Federal Reserve?
The Federal Reserve, often called the Fed, is the central bank of the United States. Its job includes helping maintain stable prices and supporting maximum employment.
But here’s the part that can be confusing: one person does not decide whether interest rates go up or down.
The group that makes the decision on the federal funds rate is called the Federal Open Market Committee, or FOMC.
It has 12 voting members. Seven are members of the Federal Reserve Board of Governors, one is the president of the Federal Reserve Bank of New York, and four other Federal Reserve Bank presidents serve on a rotating basis.
So when you hear, “The Fed raised or lowered rates,” it’s really referring to a decision made by this committee.
And why does this matter to you? Because changes in short-term rates can influence borrowing costs throughout the economy—including what consumers ultimately pay for loans and mortgages.
I’m Robert Silva with Silva Real Estate Group. I’ll keep breaking down what these changes can mean for you and the housing market.
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