The US Federal Reserve’s interest rate decisions may seem far removed from your everyday finances. But as the world’s largest market holding the most sought after currency, the US and its policies impact large parts of the global market. 

Whether you hold cash, invest in stocks and bonds, borrow money, or exchange Singapore dollars for US dollars, Fed interest rate movements can affect your money in several ways.

So, whether it’s a hike or a cut, what does it mean for you?

What is the Fed interest rate?

The federal funds rate is the benchmark interest rate for overnight borrowing between US banks. Although it doesn’t directly determine every interest rate, changes in the Fed’s policy rate can ripple through borrowing costs, bond yields, savings rates, currencies and financial markets.

When a central bank raises rates, it generally makes money more expensive to borrow. When it lowers rates, borrowing conditions