Telling Thursday

America’s first interest rate hike in nearly a decade is upon us!

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Yesterday, the Federal Reserve raised a key interest rate from 0-.25% to .25-.50%. This is the first raise since June 2006.  The increase is a minor one, but it will affect many Americans.  Those primarily affected will be investors, savers, and home buyers. When the Federal Reserve raises its key rate, the cost of many other loans, from mortgage loans to auto loans to credit cards, will also likely go up.

 

The raise has been highly anticipated, a sign of how greatly the economy has healed since the recession. The Fed put interest rates near zero during the financial crisis in December 2008 to help stimulate the economy and boost the collapsed housing market.

 

Future “gradual increases” can be expected, as the Feds anticipate to slowly build rates back up. The target is said to be around 2%, although it’s not likely to inch up to 2% until approximately 2018.

 

 

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