How does the federal reserve influence the interest rate banks charge when lending money?

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asked Jun 11, 2021 171k views

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Freephone Panwal · Answer 1 · 2021-06-16T04:54:40+0000

Answer:The Federal Reserve sets interest rates, which determine what banks charge each other to borrow money, what the Fed charges banks to borrow money and what the consumer has to pay to borrow money. ... Interest rates also reflect risk premium—how much risk both borrowers and lenders are willing to take on.

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How does the federal reserve influence the interest rate banks charge when lending money?

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