Preview

Summary Of What A Fed Rate Hike Mean To You

Good Essays
Open Document
Open Document
227 Words
Grammar
Grammar
Plagiarism
Plagiarism
Writing
Writing
Score
Score
Summary Of What A Fed Rate Hike Mean To You
According to CNN’s article “What a Fed Rate Hike Mean to You,” it informs readers that on Wednesday the key interest is going to rise which will be the second time it has since 2006. This rate hike won’t change drastically but raising the rates affects numerous Americans especially if you have a credit card, a savings account, an investment in stocks or bonds, or wanting to buy a home or car. A rate hike like this indicates that the economy is doing a bit better than eight years ago during the Great Recession. Because of the rate hike, one can earn more interest in a savings account which would be good for those who have a savings account and know how to use it correctly. The mortgage rate has gone up drastically since Trump has been elected

You May Also Find These Documents Helpful

  • Good Essays

    Federal Reserve

    • 656 Words
    • 3 Pages

    First, I will explain the federal funds rate. The federal funds rate is the interest rate at which banks loan money to each other. Banks are required, by law, to keep a certain amount of customer money on reserve. Banks try to stay as close to the reserve amount as possible, without going under, and borrow money from each other to maintain the limit. The federal funds rate affects how the banks decide on interest rates because it is used to control the supply of available funds. Raising the rate makes it more expensive to borrow and lowers the supply of available money. Lowering the rate makes it less expensive to borrow money increases the supply of available money ("Bankrate.com", 2013).…

    • 656 Words
    • 3 Pages
    Good Essays
  • Good Essays

    In my opinion, the Federal Reserve bank should not 'keep the cash spigot open'. Mr Stein, the president of the Federal Reserve Bank in Boston has stated that low rate policies help the U.S economy, however some institutions and individual investors may take on too much debt, or too many risky assets, resulting in the toppling of banks and other financial institutions.…

    • 369 Words
    • 2 Pages
    Good Essays
  • Good Essays

    Eco 372 Week 1 Dq1

    • 1399 Words
    • 6 Pages

    I believe that the economy should only get stronger should these factors play a role. Lowering interest rates, more confident consumers and asset pricing, will only allow for more money to be brought back into the economy, thus changing/helping it's current state. In the state of Arizona, even if it has been slight, there has been a rise in the housing market. A slight increase in price but there is actual spending happening. This is what our state needs as well as most states across the US.…

    • 1399 Words
    • 6 Pages
    Good Essays
  • Good Essays

    In June 2012, Federal Reserve Bank of St. Louis President James Bullard states, “the current stance of monetary policy is ultra-easy, and remains appropriately calibrated given the macroeconomic situation in the U.S” (St. Louis Fed’s Bullard, 2012, par. 1). The statement, however, is ambiguous and subsequent information provided by Bullard contained no real clarifications. For example, Bullard explained that the “policy rate remains near zero” and a “large Fed balance sheet remains in place” (par. 4). In response to comments that the Fed’s actions have only produced “very low nominal and real interest rates across the yield curve” (par.6), Bullard explains that his calculations estimate that “yields would normally be considerably higher given current macroeconomic conditions” but that the low areas are due, in part, to the “continued turmoil in Europe [that] has caused U.S. interest rates to fall due to a ‘flight-to-safety’ effect” (par. 6). Perhaps, Bullard is correct, but this does little to fully explain the current macroeconomic situation in terms of unemployment, inflation, and GDP growth, expansionary fiscal policy tools, FOMC, and easy money policy tools. Instead, Bullard’s response appears to be more of a blanketed cover.…

    • 827 Words
    • 4 Pages
    Good Essays
  • Better Essays

    Us National Debt

    • 1057 Words
    • 5 Pages

    An overlooked affect of the U.S. National debt is interest rates. Interest rates affect the everyday consumer in a variety of ways such as “mortgage rates, refinance rates, credit card rates, auto loan rates, savings rates, money market rates, and certificate of deposit rates”, among others. In the article “Interest Rates and the National Debt” the writer, whose name isn’t shown, talks about how the…

    • 1057 Words
    • 5 Pages
    Better Essays
  • Good Essays

    This article goes into the Federal Reserves recent announcement to try to stimulate the sluggish economy. Ben Bernanke announced that the fed would begin buying mortgage-backed securities and keep the interest rate low for several years. To be more specific, he said that the Fed would buy $40 billion a month of the mortgage-backed securities until the improvement of the job market. This came after recent jobs reports stating the unemployment rate remaining around 8.1%. News of the decision sent markets soaring as Ben Bernanke left the door open for further government involvement if the economy doesn’t pick up. The decision wasn’t without its controversy. Many economists point to the possibility of increasing inflation in the long run, overshadowing the short-term gains. In addition, some argued it didn’t go far enough, while others used the move to show how the current presidents policies are failing the country. His other announcement was that he was keeping short-term interest rates near zero until 2015 (an additional year past the original date). In a surprising vote, only one Fed official votes against ht the move, proving it was a good move by Ben Bernanke. The goal for the move is to invigorate or speed up the recovery process, specifically in the housing market.…

    • 875 Words
    • 4 Pages
    Good Essays
  • Powerful Essays

    Federal Reserve Benefits

    • 3493 Words
    • 14 Pages

    Discount rate is another way of saying interest, so in other words the Fed is also in charge of determining the nation’s interest rates. The changing of the discount rate can lead to drastic effects on the economy. When the discount rate is cut, the banks borrow more from the Federal Reserve and obtain more credit to lend out. On the other hand, a raised discount rate will tighten the banks up and they will be less hesitant to borrow money from banks. This is the way that the Federal Reserve functions as a “lender of last resort.” It was by the tactic of lowering the discount rate, did the Federal Reserve try to boost the economy following the September 11 Terrorist Attacks. In fact the Fed actually cut the discount rate eleven times in 2001 (Ginsberg, Lowi and Weir 2009). The raising and lowering of the discount rate is also a tactic that the Fed uses to fight inflation. Raising the discount rate decreases spending and can lead to a recession. To combat the recession, the Fed can lower the discount rate and make bank loans more available. This will raise the spending level and hopefully restore the economy to normal levels. However, an excessive decrease of the discount rate makes too much money available and can lead to inflation. If there is inflation present, raising the discount rate can help to temper spending and end inflation (Brue and McConnell 2005). When inflation was rampant in the…

    • 3493 Words
    • 14 Pages
    Powerful Essays
  • Good Essays

    This nation consists of many financial institutions but none are as powerful as the Federal Reserve System and the member banks that own it. The Federal Reserve System’s role as the nation’s central bank ensures that it wields an enormous amount of power and influence on anything to do with money and finances. The Federal Reserve’s policies and actions directly affect the nation’s interest rates, money supply, availability of credit, and inflation rates, all of which impact financial markets and institutions. The following paragraphs will address the Federal Reserve’s primary functions as well as describe the effects its policies have on financial markets and institutions and will include the effect it has on interest rates.…

    • 796 Words
    • 4 Pages
    Good Essays
  • Good Essays

    Interest rate is the cost of borrowing money. The Federal Reserve has lowered interest rates to stabilize the economy. This is one of the fiscal policies they have applied to correct this problem. Yes, the recession of 2007 has caused for lowered interest rates in 2013. The economy has been on a downturn and one of the ways to turn this downward flow around is to lower interest rates. Applying low interest rates will help households across the states save money in addition to businesses finance new spending ("Why Are Interest Rates Being Kept at a Low Level?" 2013). Furthermore, because of the lowering of interest rates, the United States dollar is depreciating. Another policy the government has created is monetary incentives for businesses in hopes of getting them to hire more employees. This process will work however maybe not in the timeframe people want it to happen. Overall, the Federal Reserve plays a vital role in that depreciation however, it has to for the economy to…

    • 1418 Words
    • 6 Pages
    Good Essays
  • Good Essays

    The Federal Reserve has been using their influence on national policies to affect the housing market, by keeping mortgage rates down. “The prime reason for the Fed 's commitment to buying Treasury debt was to lower mortgage rates to revive the moribund housing market.” (Bogoslaw, 2009) The main reason that the Federal Reserve is trying to keep mortgage rates low is to help the housing market. Mortgage rates can affect the housing starts and the housing prices. So in order to keep the housing market from going under the Federal Reserve is trying to keep mortgage rates low. For example since the economy has lowered the Federal Reserve is trying to lower the discount rate as a way of stimulating investments. The lowering of these rates would increase the supply of cash flow and as a result it will make interest rates lower. This will raise the…

    • 447 Words
    • 2 Pages
    Good Essays
  • Good Essays

    The national fiscal policy is the use of government expidenture and their taxation in order to influence the economy and influences the economic status in order to affect the rates of the housing market. There are different government bodies that have an effect on the national fiscal policies one influence is the Federal Reserve which determines the direction in which the interest rates will go whether they rise or fall. When there are lower interest rates it will increase the demand for houses in the market, during this time in the economy it is the best time to purchase a home because the prices will often be lower than usual, and will provide more people with the opportunity to buy. Federal banks can affect mortgage rates and housing prices because they have the opportunities to determine interest rates which will affect mortgage rates. When making the decision to buy a home you should take into consideration how high your interest and mortgage rates are going to be because you don’t want to end up paying more than your home is actually worth, during this economy if you have the opportunity to buy a home it would be the best time to do so because there are many houses on the market that are at very low set prices and rates because it is hard to sell which means you have an option to get a fixed rate instead of a variable rate that could change over…

    • 255 Words
    • 2 Pages
    Good Essays
  • Satisfactory Essays

    The Federal minimum wage needs to be raised from the current $7.25 an hour to a higher amount because it will help businesses, our minimum wage is low by many international standards, and the current minimum wage is not the living wage.…

    • 407 Words
    • 2 Pages
    Satisfactory Essays
  • Good Essays

    Great Recession 2007-2008

    • 425 Words
    • 2 Pages

    Our 2007-2008 financial crisis is blamed on cheap mortgage credit, including lax underwriting process and government policies. In 2003, the government passed the American Dream Development Act, which provided financing to low-income families. Trying to help lower middle class families, the policy led to mortgage subprime mortgages. Financing to families with low credit rating at high interest rates. Since a large part of the population is middle to lower class, an exhaustible demand for new homes was created. As a result, creating a bubble in home price. Some of these mortgages include Interest only (monthly payment pays nothing to the principal, thus never decreasing the principal amount financed), and Adjustable Rate Mortgage, which consists of lowering or increasing rates every year depending on market interest rate. This type of mortgage can be beneficial in times like this; but back in 2006, when interest rates were so high, many mortgages monthly payments increase more than 10% in just one month.…

    • 425 Words
    • 2 Pages
    Good Essays
  • Good Essays

    Ch 3 Kidwell

    • 461 Words
    • 2 Pages

    An increase in the cash rate may attract an additional inflow of foreign investment funds…

    • 461 Words
    • 2 Pages
    Good Essays
  • Good Essays

    Furthermore, changes in interest rate are a key determinant of consumption expenditure. This is because higher interest rates lead to a decrease in spending by consumers. People will be able to save more and will be able to pay back more money to mortgage repayments. However, a fall in interest rate will usually stimulate a rise in consumer expenditure. This is because it makes it cheaper for consumers to borrow in order to buy expensive goods such as cars. It also reduces the incentive to save because by spending now people are giving up less interest. The third reason is that those who are paying interest on a mortgage or on any other type of loan will have more money to spend. On the other hand, net savers (those who save more money than they borrow) will lose out if the rate of interest falls. Net savers, however, spend a smaller proportion of their income than borrowers do. So the fall in spending from net savers is usually…

    • 737 Words
    • 3 Pages
    Good Essays