Question

Fed has lowered the fed funds rate this year to near zero. How will this interest rate policy change affect the cost of debt for a business?

Answer 1

Fed has lowered the fed funds rate this year to near zero. How will this interest rate policy change affect the cost of debt for a business?

The Fed has lowered the fed funds rate to near zero to boost the economy. The Fed's expectation is that the banks pass on this lower interest rate benefits to its borrowers.

With lower interest rates, the banks can charge less on the loans that they make to the businesses. This should lower the cost of debt for businesses.