BACHELOR OF BUSINESS ADMINISTRATION

Detailed explanation-1: -After raising interest rates seven times last year, the Federal Reserve announced its first hike of 2023, increasing rates by a quarter of a percentage point on Feb 1. That means rates on familiar financial products like savings accounts, mortgages and credit cards may rise.

Detailed explanation-2: -The Board of Governors of the Federal Reserve System voted unanimously to raise the interest rate paid on reserve balances to 4.65 percent, effective February 2, 2023.

Detailed explanation-3: -The Federal Reserve continues to pursue efforts to stem the tide of higher inflation by slowing the economy. Since March 2022, the Fed has raised interest rates substantially while gradually reducing its asset holdings. The economy continues to maintain positive growth despite the Fed’s measures.

Detailed explanation-4: -If the federal funds rate is above the interest on reserve balances rate, then banks will seek to increase the return on their money by withdrawing funds from their reserve balance accounts at the Fed and lending these funds out in the federal funds market.