How the policy makers and investors look at the observed levels of interest rates in the market?

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Name: Professor: Course: Date: How the policy makers and investors look at the observed levels of interest rates in the market? Introduction Observed levels of interest rates are used by central banks as a regulatory mechanism in the process of controlling the economy. Simply put, these rates dictate the price of currency, and through policies from the central bank, economic stimulation can be possible, while also restraining the same is possible, this only happens when the expansion is rapid. Investors contend with the varied levels of interest rates to ensure investment in their different portfolios. With low-interest rates, central banks stimulate spending, and this applies when returns are low, leading to investments, because with low returns investors are always discouraged to save. This kind of spending leads to moderate inflation levels and increased growth in the economic segment. Also, the channel of exchange rates proposes that with interest rates that are at a minimum, investors and economists should expect depreciation levels in their currencies because capital is often channeled to markets that have yields that are higher. Depreciated currencies lead to cheaper products domestically thereby leading to increased exports and economic growth. It, therefore, follows that investment agents and policy makers have similar views on the rates of interest, and this is true because of their similar stand on economic growth. Implications of Interest Rates from Investors and Economists viewpoints In the US, the financial system is kept afloat by the Federal Reserve through the use of different tools. Such tools allow for different changes in their monetary

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