Understanding the Fed's Inflation Target and Interest Rate Terminology

After the Federal Reserve’s recent move to cut interest rates, you had questions. Lots of them! Today, we’re answering your questions about why the Fed doesn’t hold more meetings, why it tends to adjust interest rates in quarter-percentage-point increments, and why it’s target inflation rate is 2%. Plus, Kai Ryssdal unpacks the wonky relationship between the federal funds rate and the Treasury bond market.

Here’s everything we talked about today:

• “Introduction to the FOMC” from the Federal Reserve Bank of St. Louis
• “A brief history of the Federal Reserve’s emergency rate shifts” from The Los Angeles Times
• “Why does the Federal Reserve raise rates in quarter percentages?” from Marketplace
• “Federal Reserve issues FOMC statement of longer-run goals and policy strategy” from the Federal Reserve
• “Why the Fed Targets a 2 Percent Inflation Rate” from the Federal Reserve Bank of St. Louis
• “The Fed cut rates, but the yield on the 10-year T-note is up” from Marketplace
• “How Might Increases in the Fed Funds Rate Impact Other Interest Rates?” from the Federal Reserve Bank of St. Louis

Join us tomorrow for Economics on Tap. The YouTube livestream starts at 3:30 p.m. Pacific time, 6:30 p.m. Eastern.