Federal Reserve: 1 Thing All Investors Need to Know Before Sept. 16

One of the more talked-about economic topics over the past year has been inflation and the Federal Reserve's (Fed) response (or lack thereof, rather). During the last Federal Open Market Committee (FOMC) meeting in July, the Fed kept rates steady for the second consecutive time under new Fed Chair Kevin Warsh.

That said, one thing investors need to know before the Sept. 15-16 FOMC meetings is that interest rates are very likely to rise , though by how much remains to be seen.

The Fed interest rate (also known as the federal funds rate) sets the baseline borrowing cost for things like credit cards, auto loans, and mortgages . When interest rates are low, borrowing is cheaper, which tends to make people and businesses spend more. The more people spend, the higher the demand goes, giving companies leeway to raise prices and drive up inflation.