As the economy continues to grow, the Federal Reserve recently announced an increase in interest rates for the third time in 2017, to 0.25%.
According to the policymakers, the raise is due to the drop in unemployment, more inspiring consumer spending habits, and substantial business investments in the last quarter of 2017.
According to the Federal Open Market Committee, the labor market is constantly strengthening and with that, economic activity is rising more consistently.
The federal interest rate, which goes a long way in determining the rates for credit cards, mortgages, and similar loans are now hovering in a range of around 1.25% to 1.5%. At the same time, these rates remain historically low.
Two officials on Federal Reserve dissented on the decision to raise rates. The respective Presidents of the Federal Reserve Banks of Chicago, Charles Evans, and Minneapolis, Neel Kashkari, believe that policymakers ought to wait before adjusting the rates again. Since the financial crisis of 2008, these interest rates have been lifted by the Federal Reserve for the 5th time. However, policymakers still aim to raise rates up to three times in 2018 and as many as two times in 2019.
Under the guidance of Janet Yellen – the outgoing Federal Reserve chair – central bankers have wanted to ensure economic growth at a consistent pace, keeping an eye on increasing inflation, which is now below expectations.
Yellen’s 4-year term ended last February, and the position was taken over by the Federal Governor Jerome Powell last November, who was nominated by the President Donald Trump. It is widely expected that he too will look to increase rates in the near future.
The nation’s economy has increased its overall output in the last year, jumping more than 3 percent in the last quarter. In addition to that, the unemployment rate has fallen to 4.1 percent in the recent month, the lowest it’s been since 2001.
According to Fed expectations, the inflation must be at 1.7% and the rate of unemployment at 4.1% on the basis of its recent economic projections. At the same time, central bank experts expect the economy to grow at the rate of 2.5%, unlike the earlier forecast of 2.1%.
With interest rates looking to climb, you need to discuss your investments with an Anaheim Hills financial advisor from our firm. Your investments could be impacted in ways you unaware of, so get experienced advice as to how to plan your next moves. Contact Griffin Financial and we can keep you fully apprised of the latest developments and what it means for your bottom line.