The stock market is a fickle thing. Sometimes, it rises, sometimes it falls and these fluctuations are often confusing for the general public and novice investors alike. Keep reading as Douglas Battista shares insight on how interest rates affect the stock market.
Q: There are different kinds of interest rates. Which one has the greatest impact on the stock market?
Douglas Battista: The federal funds rate, which is also referred to as the overnight rate. The federal funds rate is the percentage that the Federal Reserve Bank charges depository institutions for money borrowed. The Federal Reserve adjusts this rate as a way to control inflation.