Fed on track to raise U.S. rates twice more this year

Cheryl Sanders
March 21, 2017

The Federal Reserve increased interest rates last week which you could feel in your wallet. The increase will be about one quarter of a percent, but this could be just the beginning of a series of changes set to go off throughout the economy as the FED aims to continue pushing rates up on everything from small business loans, credit cards, and mortgages.

According to a Bloomberg report, Kashkari-whose dissent came in his debut as a voter on the FOMC-argued that the Fed's actions were pre-emptive rather than reactive, adding that the central bank was opaque in explain its actions.

"In view of realized and expected labor market conditions and inflation", the Fed made a decision to raise the target range for the federal funds rate by 25 basis points to 0.75-1.0 percent, the Fed's policy-making committee said in a statement released after its two-day meeting.

In a speech on Monday, Chicago Fed President Evans stated that the setting for monetary policy had improved and that the economy is on a pretty good course right now. Notably, economist Jonathan Smoke shared the following view on the Fed's rate hike on March 15: "Today's Fed announcement is going to have the greatest impact on first-time home buyers as they consider their monthly payment budgets".

"The unemployment rate has been stuck around 4.7 percent".

That means if you have a 30 year home loan, you will now be paying tens of thousands of dollars more than before. "Because most ARMs only adjust once per year, the next rate reset could be a doozy if it encompasses 2 or 3 Fed hikes in the interim".

Interest rates have been at historic lows for the past 10 years so a quarter percent increase isn't too much to worry about.

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