--- description: Federal Reserve officials on Wednesday ended a years-long policy of keeping interest rates at or near zero title: Here's How the Fed Actually Raises Interest Rates image: https://static.time.com/v3/assets/bltea6093859af6183b/bltde093bcdab65f2d0/6988d9b9bc6cfc69913e2a3c/time-logo.jpg?branch=production --- * [Business](/section/business/) ## Business Update your preferences in [Account Settings](/account/preferences/) Close * [Economy](/tag/economy/) ## Economy Update your preferences in [Account Settings](/account/preferences/) Close # Here's How the Fed Actually Raises Interest Rates by [Alex Fitzpatrick](/author/alex-fitzpatrick/) and [Lon Tweeten](/author/lon-tweeten/) Dec 16, 2015 7:04 PM CUT by [Alex Fitzpatrick](/author/alex-fitzpatrick/) and [Lon Tweeten](/author/lon-tweeten/) Dec 16, 2015 7:04 PM CUT Federal Reserve officials on Wednesday [ended a years-long policy of keeping interest rates at or near zero](http://time.com/money/4149221/federal-reserve-raised-interest-rates/ "undefined"), 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](http://time.com/4238/janet-yellen-the-sixteen-trillion-dollar-woman/ "undefined") 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](http://time.com/4145753/fed-federal-reserve-interest-rates-janet-yellen-wall-street/ "undefined") as the elevator does. See the animated GIF below for more on how this all works.  GIF animation by Lon Tweeten ```json [{"@context":"https://schema.org","@type":"NewsArticle","@id":"https://time.com/4143274/fed-federal-reserve-interest-rates-janet-yellen-raises/","mainEntityOfPage":{"@type":"WebPage","@id":"https://time.com/4143274/fed-federal-reserve-interest-rates-janet-yellen-raises/"},"headline":"Here's How the Fed Actually Raises Interest Rates","datePublished":"2015-12-16T19:04:26.000Z","dateModified":"2026-05-11T04:50:33.842Z","description":"This GIF explains the complicated decision","url":"https://time.com/4143274/fed-federal-reserve-interest-rates-janet-yellen-raises/","keywords":["Economy","policy"],"thumbnailUrl":"","author":[{"@type":"Person","name":"Alex Fitzpatrick","jobTitle":null,"url":"https://time.com/author/alex-fitzpatrick/"},{"@type":"Person","name":"Lon Tweeten","jobTitle":null,"url":"https://time.com/author/lon-tweeten/"}],"articleSection":"Business","image":[],"publisher":{"@type":"Organization","name":"Time","url":"https://time.com/","logo":{"@type":"ImageObject","url":"https://time.com/images/logo.png","width":528,"height":156},"foundingDate":"March 3, 1923","sameAs":["https://www.facebook.com/time","https://www.instagram.com/time/?hl=en","https://twitter.com/time","https://www.pinterest.com/timemagazine"]}},{"@context":"https://schema.org","@type":"BreadcrumbList","itemListElement":[{"@type":"ListItem","position":1,"item":{"@id":"/section/business/","name":"Business"}},{"@type":"ListItem","position":2,"item":{"@id":"/tag/economy/","name":"Economy"}},{"@type":"ListItem","position":3,"item":{"@id":"https://time.com/4143274/fed-federal-reserve-interest-rates-janet-yellen-raises/","name":"Here's How the Fed Actually Raises Interest Rates"}}]}] ```