Federal Reserve Raises Interest Rates, Exuberance Ensues

Federal Reserve Crystal ball

Image from livemint.com

On Wednesday, the Federal Reserve – the central banking cartel that has a stranglehold on the American money supply – raised the key interest rate a quarter of one percent.  This move was anticipated by market watchers, and is being hailed as a good sign that the American economy no longer needs “crutches” since the unemployment rate is down to 5%, wages are starting to grow, and there is confidence that inflation rates will begin to rise.

“The Committee judges that there has been considerable improvement in labor market conditions this year, and it is reasonably that confident inflation will rise,” the Fed said in its statement.

What this means for the American people is improved return on investment as interest will be paid for the first time in years at the top of the money pyramid.  Savings cash will have a better interest rate, and stock prices in retirement accounts will increase as the markets rallied on the news that the Fed has higher confidence in improved health of the patient that is the American economy.

In addition, investment interest rates will rise, albeit slowly.  Those looking to buy large ticket items such as houses and cars will want to keep an eye on rates for borrowing.  With a slow to no growth economy, the Fed had interest rates on money so low, that mortgage rates have been a fraction of what they would be in a healthier economy.

This move is also good for travelers and international investors as the price of the dollar is sure to rise against other currencies on the prospect of a stronger U.S. economy.  Exporters will suffer (interesting in light of Congress agreeing to lift the ban on American oil exports in the spending bill being negotiated).

The Federal Reserve has held this particular interest rate at zero since the banking crisis of 2008 in an effort to keep the American economy from completely collapsing when Lehman Brothers failed.  In recent months, the experts have seen enough indicators that the economic outlook is improving to take the risk of actually charging an interest rate at the prime level.  This is a vote of confidence in the American economy…wonder what they know that we don’t.

About the Author

Cultural Limits
A resident of Flyover Country, Cultural Limits is a rare creature in American Conservatism - committed to not just small government, Christianity and traditional social roles, but non-profits and high arts and culture. Watching politics, observing human behavior and writing are all long-time interests. In her other life, CL writes romance novels under her nom de plume, Patricia Holden (@PatriciaHoldenAuthor on Facebook), and crochets like a mad woman (designs can be found on Facebook @BohemianFlairCrochet and on Pinterest on the Bohemian Flair Crochet board). In religion, CL is Catholic; in work, the jill of all trades when it comes to fundraising software manipulation and event planning; in play, a classically trained soprano and proud citizen of Cardinal Nation, although, during hockey season, Bleeds Blue. She lives in the Mid-Mississippi River Valley with family and two cute and charming tyrants...make that toy dogs.

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