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Henry Ford College *

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151

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Economics

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Feb 20, 2024

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BEC 151-98 Extra-credit activity #4 1. Title of the article : “ A history of the Fed’s interest rate hikes ”. 2. Date of the story : June 19, 2019 3. Source of the story: www.marketplace.org . Author: Janet Nguyen 4. Summary of the story : The central bank will decide whether or not to raise the interest rate following four rate hikes in 2018. A rate hike means that it will cost more credit card companies and banks to borrow money, which will mean the consumer will have to pay more on interests. During periods of economic growth, the Fed typically raises rates. During recessions, the Fed tends to lower interest rates in order to increase consumption and spending. Traders are forecasting at least one rate cut this year. 5. Core economic principles or concepts that relate to this story :  Monetary policy.  Federal Reserve.  Interest rates.  Inflation 6. Your commentary on the story utilizing the principles or concepts you identified in part 5 and any other economic material you deem relevant : The Federal Reserve decided to keep the interest rate between 2.25% and 2.5%, yesterday, June 19, 2019. The decision of the Fed to keep the interest rate unchanged means that the economic growth has slowed but it remains steady. If the Federal Reserve will decide to cut the federal funds interest, by July 2019, that means that it could have a negative effect on banks and their quarterly earnings. The Fed said that they are prepared to cut rates if inflation remains low. 7. Follow up question in response to the story: Will the Fed cut interest rates in July? What effect will have on the economy? Will boost spending and consumption? How is the war trade between the USA and China affecting the decision of the Fed to not lower interest rates?

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