The Importance of Low Interest Rates in Banking

When the Fed raises interest rates, banks are going to raise their interest rates. And so if... Let's say Thomas had a great idea for a business, a drive-through liquor store. He can either save his money and pay it out of pocket or he can go and take out a loan. If interest rates are low, Thomas can do that. But in terms of the national banking system, when the Fed raisesinterest rates, banks will raise their interest rate. Mortgages are going to get more expensive and borrowing money is getting harder.