The interest rates that shape the economy and your portfolio are increasing again.
As expected, interest rates are on the rise again. Federal Reserve Chairman Jerome Powell, the nation’s top financial policy maker, and the Federal Open Market Committee (FOMC) voted on June 13 to raise rates by 0.25 percent. Known as the Federal Funds Target Rate, it sets the basis for what banks charge other banks to borrow money, and is the starting point for many consumer-facing interest rates like credit cards and auto loans. The quarter-point hike sets the target rate between 1.75 percent and 2 percent.
To spur growth after the Great Recession, the FOMC kept rates near zero for seven years before beginning to increase them once again. In raising rates for the second time this year, the FOMC again cited improvements in the job market and solid economic growth. “The economy is doing very well. Most people who want to find jobs are finding them, and unemployment and inflation are low," Chair Powell said in a press conference after the announcement.
Interest rates deeply impact Main Street. Here are four of the most common ways rising rates could impact you.
Contact your financial advisor for more information on how interest rates play a role in your investment portfolio.