Most important factors in interest rate decision reached by Fred.
Fred has to take in to consideration the economic performance of the economy. Interest rate has been touted as the key determinant in the rate borrowing in any economy. People will opt to go for borrowings when the interest rate is low. On contrary, when the interest rate is high, many people are discouraged to borrow due to the high costs involved in furnishing the capital.
Interest rate should also put some consideration on the type of business the borrower engages in.Taking in to consideration risky businesses, it becomes a tricky situation since return in uncertain, Hence in this circumstance, people are forced to opt for different funding method.
Economists have variety of theories to base their decisions on. As a way of example, there are different theories advanced on how to promote economic growth. There were economists who base their arguments on little or no government intervention while others advocate for government’s involvement in the operations of an economy. Since each luminary has a backing for his theory, It will then be a matter of which theory fits the prevailing economic circumstance.
Cost savings that are inherent
In manual system, there are increased costs due to the nature of filing. Lot of paperwork calls for increased costs of purchase, no forgetting the filing procedures to be applied calling for employment of staff to handle that. The system is also prone to being tampered with by environment factors e.g. moisture, fire, to mention a few. Contrary to this, electronic system offers quick, low costs associated with cyberspace as well as high security since information is stored in electronic form
Electronic form of information is prone to hacking, hence can leak very confidential information for a company. Tight security measures have to be adopted for betterment of the system.
The best way for the company to roll out electronic system is phasing out the old procedures in a systematic manner. Any prompt measures will only serve to cause serious financial crisis.
Most of customers will greet the new system with applause due to its efficiency, but others will treat it with suspicion. It all depends on previous experience on the new platform.
