The Federal Reserve of the United States is a powerful organization. It controls the money supply in the U.S., and any action it takes has large affects on world markets. Whenever you go to the bank, you can thank the Fed for the interests rates.
The banks can't really control the interests rates that Americans use to borrow. The Fed controls it. Why? Well, to keep prices stable and provide the best conditions for employment. By raising or lowering the interest rates, the Fed can either encourage or discourage consumers form spending versus investing that money in a bank account. To sow down the face of economic growth, it can raise the rates.
The fed also controls the amount of capital in banks. Banks charge each other to borrow money, and the Red influences that rate, called the federal funds rate. The Fed can increase the FFR to increase bank interest rates to increase the cost of borrowing money. The banks will increase their rates for their clients like large companies and within 60 days the effects will show up usually.
Recently, the Fed has increased the benchmark interest rate due to a strong labor market and good economic growth. The Fed obviously wants to cool down the growth so increasing the rate from 1.25% to 1.5% is the way. With an unemployment rate of 4.1%, that is better than expected so we don't want it to keep decreasing, which is bad. Full unemployment should be around 4 - 6% for a healthy economy or else you can get symptoms like hyperinflation which just makes everything worse.
Despite the hurricanes and all of the damages that have occurred over the year, the economy is still projected to increase by a lot, so the gradual adjustments will allows Americans to "savor' the long-term affects of the growth.
As beneficial as the Fed is, a lot of people hate it. We heard things like "Abolish the Fed!" or "Down with the Fed!" because people believe it has too much power and does not always act in the interest of consumers. That's a difficult debate because like everything that has been politicized, there are drawbacks and benefits. Obviously people don't like the thought of some large bank controlling how they make everyday. However, people like that there is stability and that they are continuing to live in a relatively stable economy without fluctuations that will occur if the Fed really was every abolished.
http://www.businessinsider.com/federal-reserve-statement-on-interest-rates-december-2017-12
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