There’s a huge misconception about the Federal Reserve: that it controls all interest rates.
Here’s the reality:
The Fed sets the federal funds rate — the overnight rate banks charge each other.
Mortgage rates, credit card rates, and Treasury yields are set by the bond market.
Yes, the Fed is a big player — but it is not the bond market.
This means the Fed can’t just “snap its fingers” and make mortgages 2% tomorrow. Those rates are determined by investors, supply and demand, and risk. Understanding this distinction is critical to understanding the real economy.
#FederalReserve #InterestRates #BondMarket
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