Think of it as a reference dial near the start of the credit system, rather than the price label on every loan.
01
Go deeper
The Fed sets a target range and uses administered rates to help keep the market rate inside it. Banks then set their own customer rates. Expectations, credit risk and loan length also matter.
02
Make it concrete
Hypothetical illustration. A hypothetical 0.25 percentage-point target increase is 25 basis points. A mortgage need not rise by exactly that amount.
03
When you read a headline
Distinguish the target range, the effective market rate and your actual loan offer.