Federal Reserve Raises Rates to Combat Inflation
The Federal Reserve has raised its benchmark interest rate by a quarter-point to combat inflation. This is the first rate hike since summer 2023, and it will likely make borrowing more expensive for consumers. The increase in rates brings the Fed's target range to 3.75% to 4.00%, which means that people who borrow money will pay more interest on their loans.
Anyone who is currently paying off a mortgage or credit card debt may see their monthly payments go up, although the impact of this rate hike may be small for now. According to Matt Schulz, chief consumer finance analyst at LendingTree, 'a single quarter-point rate increase isn't really going to have a huge impact' but it would make a difference if there were multiple hikes.
On the other hand, savers can expect to earn higher interest on their savings accounts and certificates of deposit. The Fed's move will likely lead to an increase in rates for these types of accounts, which could be good news for people who have money saved up but not invested.