The interest rates that shape the economy and your portfolio are increasing again.
As expected, interest rates are on the rise again. Federal Reserve Chairwoman Janet Yellen and the Federal Open Market Committee (FOMC) voted on March 15 to raise the Federal Funds target rate by 0.25%. This rate sets the basis for what banks charge other banks to borrow money, and it's also a starting point for interest rates on consumer-facing products like credit cards and auto loans. The quarter-point hike sets the target rate between 0.75% and 1.00%.
To spur growth after the Great Recession, the FOMC kept rates near zero for seven years. In raising rates for only the third time since June 2006, the FOMC again cited improvements in the job market and inflation as reasons to raise rates now and gradually raise them over the coming years. "The simple message is the economy is doing well," Chair Yellen said in a press conference after the announcement. "We have confidence in the robustness of the economy and its resilience to shocks."
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.