Why does the Fed sometimes increase interest rates?

Question

to help more people get loans and become borrowers
to speed up the economy and help it grow quickly
to prevent banks from making profits that are too large
to slow inflation by stopping the economy from growing too fast

Answer 1

The Fed sometimes increases interest rates in order to slow inflation by stopping the economy from growing too fast. This is because when the economy is growing too quickly, it can lead to inflation as demand for goods and services outpaces supply. By raising interest rates, the Fed can make borrowing more expensive, which in turn can reduce consumer spending and investment, thereby slowing down economic growth and inflation.