The Federal Reserve has raised its key interest rate five times this year, most recently on Wednesday, as part of its ongoing effort to slow the pace of inflation.
The idea is that since the U.S. central bank is making it more expensive to borrow money, the demand for goods and services will drop, thereby causing prices to fall.
A side effect of those increased interest rates is that banks can increase the amount of money they pay to consumers who put some of their dollars in savings accounts. As banks earn more on the money they lend, those same institutions can offer higher returns to their customers.
Think of it as the virtuous cycle of the lending and saving relationship that banks have with their customers. But until recently, the interest earned on savings accounts hasn't been all that impressive.
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