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Interest Rates and the Federal Reserve
Content developed by CUNA Brokerage Services, provided by Dwight Lee & Jason Persinger

Have you ever wondered: "What does the Federal Reserve really do?"

The Role of the Federal Reserve
The Federal Reserve, commonly referred to as The Fed, was created to foster a sound banking system and a healthy economy by serving as the banker's bank, the government's bank, the nation's money manager and the regulator of financial institutions.

How the Federal Reserve's Actions Can Influence Interest Rates:
    Open-Market Operations
    The Fed constantly buys and sells U.S. government securities in the financial markets, which in turn influences the level of interest rates in the banking system.

    Discount Rate
    This is the interest rate that banks pay on short-term loans from the Federal Reserve. This can affect how much banks charge people that borrow money from the bank.

    Reserve Requirements
    This is the amount of physical funds a financial institution is required to hold in reserve against deposits in customer accounts. It determines how much money banks can loan to its customers. For example, the more reserves the Fed requires, the less the bank can loan.
Influence Not Control
It's important to remember that the Fed does not dictate market interest rates. It merely tries to influence them.

Stay True to Your Goals and Your Plan
Regardless of the direction taken by the Fed, or resulting fluctuations in the market, the key for investors is to stay focused on the long-term. Discuss your questions or concerns with an experienced financial advisor. Together you can map a strategy to reach your financial goals and not only understand, but weather, various economic conditions.

Dwight Lee & Jason Persinger are Financial Advisors with Members Financial Services located at NuVision Federal Credit Union. If you have any questions, or would like to provide feedback, regarding the information presented in this article, you may contact Zack Seitz at 714.375.8151 or

Representative is not a tax advisor or legal expert. For information regarding specific tax situations, please contact a tax professional. For legal advice, consult an attorney.

Representatives are registered, securities are sold, and investment advisory services offered through CUNA Brokerage Services, Inc. (CBSI), member FINRA/SIPC, a registered broker/dealer and investment advisor, 2000 Heritage Way, Waverly, Iowa 50677, toll-free (866) 512-6109. Nondeposit investment and insurance products are not federally insured, involve investment risk, may lose value and are not obligations of or guaranteed by the financial institution. CBSI is under contract with the financial institution, through the financial services program, to make securities available to members. FR061021-91F1

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