Federal Reserve Raises Interest Rate, Now What?

 

The Federal Reserve raised interest rates by 0.25% on May, 3, 2023, marking the 10th consecutive rate hike since March 2022. The move is an effort to combat inflation, which is currently running at a 40-year high.

The Fed's rate hikes are expected to have several effects on the economy. They will make it more expensive for businesses to borrow money, which could slow down investment and hiring. They will also make it more expensive for consumers to borrow money, which could dampen spending.

So what does this mean?

If you are a borrower, higher interest rates will mean that you will pay more on your loans. This is true for adjustable-rate mortgages and other variable-rate loans. If you are planning to take out a loan in the near future, you may want to consider locking in a fixed-rate loan to avoid the risk of rising interest rates.

If you are a saver, higher interest rates will mean that you will earn more on your savings accounts and CDs. This could be a good time to consider moving your money into a higher-yield savings account or CD.