Category Economic & Market Insights

The Federal Reserve (Fed) plays a pivotal role in shaping the U.S. economy by balancing two critical objectives: promoting economic growth and controlling inflation. This balancing act is essential because both objectives can sometimes conflict with one another. Too much focus on growth can lead to high inflation, while tightening policies to curb inflation can slow down economic growth. The primary tool the Fed uses to manage this delicate balance is interest rate adjustments.

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The Federal Reserve, often referred to as “the Fed,” plays a crucial role in the U.S. economy by managing monetary policy. One of the most significant ways the Fed affects the financial lives of everyday Americans is through its influence on consumer loan costs. From mortgages to auto loans and credit card interest rates, the Fed’s decisions on interest rates directly impact how much consumers pay to borrow money.

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Mortgage-backed securities (MBS) have long played a key role in the global financial markets, offering investors steady income streams while providing liquidity to the mortgage industry. An MBS is created when a pool of individual mortgages is bundled together and sold as a single security to investors. The payments homeowners make on their mortgages are then passed along to these investors. MBS have historically offered relatively attractive yields and a diversified approach to real estate investing without direct property ownership.

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