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7 Benefits of a Federal Reserve Interest Rate Hike

(TNS)—Interest rates are going up. Higher Returns for Savers If you’re a saver, low interest rates have brought about the financial equivalent of a long drought. “Interest rates have been so low for so long that many people have fallen out of the habit of rate shopping,” says Robert Frick, corporate economist for Navy Federal Credit Union. This is especially important for people on fixed incomes.” Tamed Inflation Most broad-based measures of prices indicate inflation has continued to remain under control in the U.S. in recent years. A positive inflation scenario after a rate increase might include “lower prices of imported consumer goods, due to a likely higher exchange value of the dollar if our domestic rate increases are not matched by policy tightening in other major economies,” says Daniil Manaenkov, U.S. forecasting specialist at the Research Seminar in Quantitative Economics at the University of Michigan. More Lending A credit bubble rightfully received some of the blame for the financial crisis in 2007. More Interest Income for Retirees As a rate boost brings better returns to savings vehicles, senior citizens should enjoy better paydays by putting their money in CDs and savings accounts. As the population ages in coming years, many more Americans will come to appreciate even modest increases in interest income during retirement when they buy certificates of deposit. Stronger Dollar to Boost Purchasing Power As the Fed continues to boost rates (and with the outlook for more rate hikes to come), the U.S. dollar gets more support. If the prospect of higher mortgage rates compels you to a home sooner than later, you won’t be alone.