The Current Banking System Stress: Exploring The Impact Of Higher Interest Rates.
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Introduction: Explanation of the Federal Reserve and its role in setting interest rates: The Federal Reserve, also known as the Fed, is the central bank of the United States. It was established in 1913 with the goal of promoting economic growth and stability. One of the primary tools the Fed uses to achieve this goal is the manipulation of interest rates. The Fed's Federal Open Market Committee (FOMC) is responsible for setting the federal funds rate, which is the interest rate that banks charge each other for overnight loans. This rate, in turn, affects other interest rates, including those for consumer loans, mortgages, and credit cards. A brief overview of the current state of the banking system: The banking system has been under stress due to a variety of factors, including the ongoing COVID-19 pandemic, geopolitical tensions, and supply chain disruptions. These factors have led to concerns about rising inflation and the potential for a recession. In addition to these extern