Not necessarily, as a drop in the Federal Funds rate also affects the Prime Rate on which investments as well as debts are based. While a drop in the Prime Rate may be good for adjustable rate mortgage payers and credit card holders, interest rate sensitive investments will also be affected. If you are about to roll over a Certificate of Deposit or make a change in some other money investment, check to see what direction rates are moving? If the Fed cuts rates, most all-future investments that pay interest will pay a lower rate including CDs. In addition, the Fed is trying to maintain an economy with stable prices and growth. If a low rate puts increased demand pressure on the economy, it is likely to heat up too quickly, prices are liable to rise and an increase in the general level of inflation will most likely be the result.

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