How Federal Reserve Interest Rate Hike Affects You

It’s been one week since the Federal Reserve raised interest rates. The target range for its rates are now between 2.25 percent to 2.5 percent.

December’s rate hike marks the fourth increase in 2018. 

President Donald Trump has opposed the decision saying interest rates are being raised too quickly. Trump also took to Twitter saying he thinks it’s “incredible” that “the fed is even considering yet another interest rate hike.”

Financial advisors and experts are keeping an eye on the situation from Oklahoma, including Tim Courtney from Exencial Wealth Advisors.

Courtney says two separate groups are affected, those who are saving and those who are borrowing.

Those who are saving could benefit.

“Bank rates on CD's (Certificates of Deposit) and money market rates move higher and you can earn more money now. Whereas three years ago, savers were earning close to 0 on their money,” said Courtney. “Now you can easily go get 1.5% to 2.5% on savings and CD's.”

Those looking to borrow money could also be paying more in interest rates.

“It should mean that the economy is healthy, unemployment is very low and one of the drivers of inflation and what the federal reserve is looking at as you’re seeing wages move higher,” said Courtney. “But they also don't want to see wages start to cause higher and higher price movements moving forward.”

Before making any financial decisions, it is important to check with a financial advisor to determine the best possible move for you.