Interest Rates are more important than you think

Have you wondered why the economy seems to be struggling or that the stock market is "suddenly dropping?" An huge factor of the economy is the interest rate. They quietly shape the economy, from the cost of loans to the way the entire economy grows. Interest rates are the cost of borrowing money. When the rates are high, borrowing is more expensive. When they are low, it is cheaper. The Federal Reserve adjusts the interest rates in order to keep the economy stable, if inflation rises too quickly then the rates will be increased in order to keep it in control. If the economy is weak, it will lower rates in order to encourage borrowing/growth. So why do investors like you and I care so much about interest rates? High interest rates directly harm the profits of companies, leading to stock values to dip. When interest rates are low, the stock market thrives. Interest rates are an important factor of not just the stock market, but the whole economy. You should understand and follow interest rates in order to give you a better understanding of the US economy.