The Federal Reserve wants to raise interest rates because it sees the economy as healthy and growing strongly. The Fed's goal is to keep the economy on track and avoid high inflation, but it also wants to avoid a bubble in the economy, such as a housing bubble. High interest rates make it more expensive for people and businesses to borrow money, which slows down spending and investment. This can help avoid the economy from overheating and inflation from getting too high.

The Fed typically raises interest rates by adjusting the rate at which banks can lend to each other overnight. This rate is called the federal funds rate. When the Fed wants to tighten credit, it sells bonds held by the Fed or adjusts the rate at which banks can lend to each other overnight, known as the discount rate. This makes it more expensive for banks to get Fed credit and they must charge higher interest rates on loans to make up for it. Borrowers will have to pay higher interest rates on mortgages, car loans and credit card loans, which will slow down spending and economic growth.

Economists and investors are watching the Fed's moves carefully because they can affect the economy. High interest rates can make it more expensive for businesses and consumers to borrow money, which can slow down spending and economic growth. The Fed's decision is based on economic data such as the unemployment rate, GDP growth and inflation. Fed officials will look at all of this data and make a decision on whether to raise interest rates based on their assessment of the economy.