The Federal Reserve has just raised interest rates by .75 basis points! But what does that mean?
In short, a basis point is a hundredth of a percent, so the Fed has increased the cost of borrowing money by .75%.
This increase in interest rates typically means that borrowing becomes more expensive and savings become more attractive.
The Federal Reserve’s primary goal in raising interest rates is to slow economic growth and to prevent inflation.
The good news for savers is that with higher interest rates, savings accounts and other forms of savings become more attractive.
For those with debt, however, the higher interest rates mean that the cost of borrowing money will go up, making it more difficult to pay off debt.
It’s important to keep in mind that this is only the first of a series of rate hikes that the Federal Reserve is expected to make over the course of this year.
It’s important to stay informed and to plan ahead so that you can make the best decisions for your financial future.
