Recently, newly appointed Federal Reserve Chairman Kevin Warsh announced that the Federal Reserve would raise interest rates by a quarter percentage point, from 3.75% to 4%. This comes after three consecutive cycles of Chairman Jerome Powell holding the interest rate flat.

The Federal Reserve operates under a dual mandate to maximize employment and price stability. Put simply, the Fed's interest rate sets the cost of borrowing money. Generally speaking, hiking the interest rate supports price stability at the cost of slowing economic growth, and cutting interest rates supports economic growth at the cost of raising inflation. READ MORE