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The Federal Reserve will keep interest rates low for now, but has brought forward its hike schedule. (iStock)
The Federal Reserve ended its September meeting on Wednesday by announcing that it would keep the fed funds rate within its target range of 0% to 0.25%. That is until labor market conditions show substantial progress and its long-term inflation outlook increases. However, he signaled that he would likely hike rates starting in 2022, and that there might be three more rate hikes in 2023.
“With progress in immunization and strong political support, indicators of economic activity and employment continued to strengthen,” the Federal Open Market Committee (FOMC) said in its statement. “The sectors most affected by the pandemic have improved in recent months, but the increase in COVID-19 cases has slowed their recovery. “
If you want to take advantage of interest rates before they start to rise, you may want to consider refinancing your private student loans to lower your monthly payments. Visit Credible to find your personalized interest rate and see how much you could save.
The Fed is developing an economic stimulus plan
As the economy continues to improve, the central bank is preparing to adjust its monetary policy to end its economic stimulus later this year and start raising rates next year.. This is sooner than expected, as the Fed did not plan to hike rates until 2023.
“The job market has improved, inflation is skyrocketing and supply chain constraints persist,” said Mike Fratantoni, senior vice president and chief economist of the Mortgage Bankers Association (MBA). “As a result, it’s no surprise that the Fed is starting to remove the accommodation. The biggest news from this meeting has been the change in FOMC projections, with most members now seeing a first hike in interest rates. in 2022, which is faster than many market participants had previously anticipated. “
The Fed stressed that no decision has been made, but it expects it will start cutting its bond purchases by November or December and end its economic stimulus programs by next year. .
“Although no decision has been taken, participants generally felt that as long as the recovery remains on track, a phase-down process that ends around the middle of next year is likely to be appropriate,” he said. Federal Reserve Chairman Jerome Powell said.
This move could cause interest rates to rise even before the Fed raises the fed funds rate. If you want to take advantage of interest rates that are close to historic lows, you may want to consider refinancing your mortgage. Homeowners who refinance could save hundreds on their monthly mortgage payments. Visit Credible to get pre-approved in minutes without affecting your credit score.
COVID-19 could change the direction of the economy
Despite the positive outlook from the FOMC meeting, the Federal Reserve warned that COVID-19 and the spread of the delta variant could still influence economic growth and their decisions on interest rates.
“The trajectory of the economy continues to depend on the evolution of the virus,” the Fed said in its statement. “Advances in immunization are likely to continue to reduce the effects of the public health crisis on the economy, but risks to the economic outlook remain.”
The Federal Reserve now plans to hike rates in 2022, and with the cut set to begin later this year, interest rates are likely to rise.. Borrowers can take advantage of today’s low rates by taking out a personal loan to consolidate other high interest debt into a single monthly payment. Contact Credible to speak to a personal loan expert and get all your questions answered.
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