1. Why do stock markets react immediately to Fed rate changes?
Stock prices shift quickly because borrowing costs affect company profits, growth plans, and investor expectations.
2. How do higher interest rates affect everyday consumers?
Higher rates increase loan repayments, which can reduce spending on homes, cars, and other goods.
3. Why do bond prices fall when interest rates rise?
New bonds offer better returns during rate hikes, so older, lower-yield bonds lose market value.
4. How are cryptocurrencies linked to Federal Reserve policy?
Crypto markets respond to liquidity conditions since easier money often increases demand for risk assets.
5. Why do global markets follow US interest rate decisions?
The US dollar dominates trade and finance, so rate shifts influence capital flows and exchange rates.