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Interest rates are rising. The Federal Reserve in June raised rates for the second time in 2018. And there could be two more rate hikes before the end of the year. Here's how you can take advantage of other positive results from Fed rate increases.
Higher returns for savers
Low interest rates weighed on savers. Any improvement, however modest, is welcome.
"Interest rates have been so low for so long that many people have stopped shopping," said Robert Frick, an economist with the Navy Federal Credit Union. "But now that rates are rising, they should get back into the habit and see bigger gains from their accounts."
Tame inflation
A positive inflation scenario after a rate hike could include "lower prices for imported consumer goods, due to a likely higher exchange rate if our rate hikes are not offset by a tightening of other major economies, "said Daniil Manaenkov, United States. Research Specialist at the Quantitative Economics Research Seminar at the University of Michigan.
More loan
A credit bubble was partly responsible for the financial crisis in 2007. Subsequently, the loans completely stopped. The loan has resumed. "Banks could be more incentivized to lend at higher interest rates, and the increased flow of additional credits would stimulate economic growth," said Sean Snaith, director of the University's Institute for Economic Competitiveness. Central Florida.
A stronger dollar to boost the power of buying
As the Fed continues to raise rates (and with the prospect of further increases coming soon), the US dollar is receiving more support. In the end, this means greater buying power with the greenback compared to other currencies.
The tightening of the Fed "should translate into a slightly higher dollar, so that people traveling to Europe will be doing well," said Dean Baker, co-director of the Center for Economic and Policy Research in Washington.
Shares will trade on fundamentals
Stock prices can begin to make more sense and not reflect the easy monetary policy of the central bank. "Rate normalization would help focus on market fundamentals and focus on the nuances of each Fed statement," said David Nice, a former senior economist at DS Economics in Chicago.
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