The interest rate increase announced by the Federal Reserve on Wednesday will have a direct impact on both the economy and your personal finances.
The Fed’s short-term benchmark interest rate was raised by half a percentage point, the sharpest increase since 2000. This action was widely expected in financial circles, but it nonetheless will have repercussions throughout the economy.
For consumers, the most immediate impact will be felt in the form of higher interest rates on credit cards and other forms of debt. This could lead to increased financial strain for many households. In addition, the interest rate hike is likely to lead to higher loan rates, making it more expensive to buy a home or car. As a result, Wednesday’s interest rate announcement is likely to have a ripple effect on the economy for months to come.