What is the effect of a federal interest rate increase on consumer savings accounts?

When the federal interest rate increases, it often leads to higher interest rates being offered on consumer savings accounts. Banks and financial institutions typically adjust their rates in response to the monetary policy set by the Federal Reserve. As a result, when the federal interest rate rises, account holders usually benefit from increased interest earnings on their savings. This makes savings accounts more attractive for consumers, as they can earn more on the money they save. Therefore, the correct answer is that a federal interest rate increase generally impacts positively for the account holder, leading to more favorable conditions for saving and growing their funds over time.