How is the Federal reserve system involved in your business.

How the Federal reserve system influence or discourages your business.

The federal reserve system is the Central Bank of America founded in 1913 to provide a stable financial system to all Americans. Many people do not understand how much The FED really has to play in our business's. One main reason the FED contributes to the success or failure of a business is by controlling the monetary policy. Monetary policy is the term that refers to what the FED does to influence business owners amount of money and credit. When the money or credit is changed this affects interest rates. You are probably asking yourself how does this have to do with my business. But it has all to do with your business. When The FED lowers interest rates the banks can access money cheaper making is more likely for loans to be made to YOU! This is a big upside to the Federal reserve system. But not only can the FED better your business they can also cause problems. The FED could do the exact opposite and raise interest rates making it harder to access money causing loans to not be made. This could hurt your business considering that some bills must be paid by loans. The Fed also decides on the discount rate this is the rate at which banks borrow money, if the discount rate is raised then its harder to borrow money . So therefore the FED not only contributes to your business but can cause problems too.



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