Federal Reserve officials on Wednesday ended a years-long policy of keeping interest rates at or near zero, voting for the first rate hike since 2006 and ending a hotly-debated monetary policy that was meant to keep the American economy afloat in the wake of the financial crisis.
But Fed Chair Janet Yellen and her fellow central bankers can’t simply throw a switch that automatically sets interest rates across the economy. Instead, the Fed will rely on two tools to help lift rates into a target range. Think of the Fed as pulling and pushing the elevator up and down, and the cost of money for everyone from consumers to corporations rises and falls as the elevator does.
See the animated GIF below for more on how this all works.
More Must-Reads from TIME
- How Donald Trump Won
- The Best Inventions of 2024
- Why Sleep Is the Key to Living Longer
- How to Break 8 Toxic Communication Habits
- Nicola Coughlan Bet on Herself—And Won
- What It’s Like to Have Long COVID As a Kid
- 22 Essential Works of Indigenous Cinema
- Meet TIME's Newest Class of Next Generation Leaders
Write to Lon Tweeten at lon.tweeten@time.com