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<Why would would the Fed skyrocket interest rates if the economy is still struggling? >

The Federal Reserve controls the federal funds rate, which is a short-term interest rate. It is the rate that banks charge each other for overnight loans.

The Federal Reserve does not control long-term interest rates. The long-term interest rates fluctuate, based on the supply of, and demand for, long-dated debt instruments, including Treasury bonds.

The Treasury auctions bonds, to raise money for the government. About half of auctioned Treasuries are bought by foreigners. If the dollar falls, the interest on the bond is worth less, when converted into a foreign currency. Foreign buyers would have to build the risk of future dollar drops into their bids.

This could cause the long-term bond interest rate to rise.
Wendy
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