When the Fed aims to change interest rates it asks Congress to legislate new interest rates.
Interest rates are used by the Fed, like all central banks, to control the macroeconomy. While increasing rates makes borrowing more expensive and inhibits economic growth, decreasing rates stimulates borrowing and investment on more affordable credit.
The rate tells you just how much interest you'll make or pay on a loan. For instance, the interest on a $100 loan with a nominal interest rate of 6% would be $6 ($100 X 0.06). If the loan's size grows, the interest rate stays the same. If a borrower took out a $1,000 loan, the interest rate would remain 6%.
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