How does the Federal Reserve's control of interest rates affect the cost of living?

If the Federal Reserve maintains interest rates at a constant level, it could have several potential consequences. On one hand, it could provide stability and predictability for businesses and investors, which could encourage economic activity. However, it could also lead to problems if the economy needs a boost or cooling down, and the Fed is not adjusting interest rates to respond to these needs. For example, if inflation is rising and the Fed does not raise interest rates, it could lead to an overheated economy. Conversely, if the economy is in a downturn and the Fed does not lower interest rates, it could prolong the recession.

If the Federal Reserve does not lower interest rates during slow economic growth, it could potentially hinder economic recovery. Lower interest rates encourage borrowing and investment, which can stimulate economic growth. If rates are not lowered, corporations may be less incentivized to borrow money for investment purposes, which could slow down economic activity even further.