The Federal Reserve raised its short-term benchmark rate by one quarter of a percentage point on Wednesday. This widely expected decision increases the federal-funds rate to between 0.25% and 0.50%.
You’ll feel the impact of rising rates on an individual level and on a household level. When interest rates go up or down, the resulting changes in other rates impact the way we borrow money, but also how we save money.
Frustrated house hunters, for example, have already seen mortgage rates increase in recent months. Rising rates mean home buyers will pay a little more each month in mortgage payments.
“Raising the interest rate is about creating an inducement to save,” said Laura Veldkamp, professor of finance and economics at Columbia University. “It’s basically a deterrent to consumption spending. When an economy is overheated, raising the interest rate is a…
