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The Federal Reserve holds the target Federal Funds Rate at 5.00% or so, the first rate-pause in nearly a year.

For those unaware, the Fed is the central bank of the USA. Their goal is to minimize inflation and maximize employment, largely through their control of the FFR.

Money market funds, such as Vanguards VMFXX or Schwab's SWVXX, closely track the FFR minus a few fractions-of-a-percent that they take for fees. So all investors have the ability to access this incredibly low-risk investment.

As this "low risk" investment makes more yield, the general theory is that everyone else in the economy takes slightly less-and-less risk. After all, if you can make money off of low-risk, why bother chasing the high-risk portions of the economy?

That leads to either riskier-portions being more expensive (ie: if a risky-company wants to borrow money, they have to borrow it at higher %). Or lose value (if a risky company wasn't planning to make a profit for another 10 years, those 10-years of no-profits just got far more costly, and therefore the company loses theoretical value).

Recent indicators suggest that economic activity has continued to expand at a modest pace. Job gains have been robust in recent months, and the unemployment rate has remained low. Inflation remains elevated.

The U.S. banking system is sound and resilient. Tighter credit conditions for households and businesses are likely to weigh on economic activity, hiring, and inflation. The extent of these effects remains uncertain. The Committee remains highly attentive to inflation risks.

The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. In support of these goals, the Committee decided to maintain the target range for the federal funds rate at 5 to 5-1/4 percent. Holding the target range steady at this meeting allows the Committee to assess additional information and its implications for monetary policy. In determining the extent of additional policy firming that may be appropriate to return inflation to 2 percent over time, the Committee will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments. In addition, the Committee will continue reducing its holdings of Treasury securities and agency debt and agency mortgage-backed securities, as described in its previously announced plans. The Committee is strongly committed to returning inflation to its 2 percent objective.

In assessing the appropriate stance of monetary policy, the Committee will continue to monitor the implications of incoming information for the economic outlook. The Committee would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee's goals. The Committee's assessments will take into account a wide range of information, including readings on labor market conditions, inflation pressures and inflation expectations, and financial and international developments.

Voting for the monetary policy action were Jerome H. Powell, Chair; John C. Williams, Vice Chair; Michael S. Barr; Michelle W. Bowman; Lisa D. Cook; Austan D. Goolsbee; Patrick Harker; Philip N. Jefferson; Neel Kashkari; Lorie K. Logan; and Christopher J. Waller.

Implementation Note issued June 14, 2023