how does the fed use interest rates in the economy 
the federal reserve along with other central banks around the world uses interest rates as a monetary policy tool by increasing the cost of borrowing among commercial banks the central bank can influence many other interest rates such as those on personal loans business loans and mortgages this makes borrowing more expensive in general lowering the demand for money and cooling off a hot economy lowering interest rates on the other hand makes money easier to borrow stimulating spending and investment 