Nicole Lapin

Now, I'm going to get into how this affects you.

Your bank is going to adjust your interest rates depending on what the rate is that they're getting from other banks.

This is the sort of same philosophy as tariffs.

Businesses pass on increased costs to their customers so that they can keep their own margins and their own business running.

Your bank basically does the same thing.

Here's the thing most people get wrong about the federal funds rate.

It doesn't directly set your mortgage rate or your car loan or your business loan.

Banks definitely take a look at what the Fed is doing, but then they make their own calculations.

The relationship is real, but it's not a one-to-one.

The rate that does move directly and immediately?

High-yield savings accounts and money market funds.

When the Fed cuts, those rates fall fast.

When the Fed raises rates, they go up.

So if you're sitting on cash in a regular old savings account paying 0.01%, sorry to say, but you're already losing the game.

But hopefully you've already signed up for a high yield savings account with SoFi.

If you haven't, hang on to the end of the episode and I'll tell you exactly how.

So the Fed funds rate is a lever that makes it easier or harder to borrow.

Now, the Fed is supposed to use that lever to control two things.

Number one, inflation.

Number two, unemployment.