Here's how the latest Fed rate hike will hit your wallet
While the rate hike and the Fed's plan to shed some of the assets on its balance sheet will have a long-term impact on the economy, there is one short-term impact that will hit your wallet almost immediately.
Most simply, the fed funds rate determines the interest rate at which banks borrow short-term money.
Increases are passed on to other borrowers, mostly consumers, through higher rates on things like credit-card debt.
This debt is based on the banks' prime loan rate, the interest rate used as a starting point for nonmortgage loans.
The Fed's decision to raise the fed funds rate by 0.25% had an immediate impact on these rates on Wednesday, sending them to 4.25% from 4%, mirroring the magnitude of the Fed's increase.
And so after what seemed like an arcane and abstract policy change from the Fed on Wednesday, this is the impact that might matter to those who don't follow the news as closely as they follow their credit-card bill.
Here's the quick rundown of the changes to prime loan rates - all to 4.25% from 4% - announced at major US banks so far:
- A couple accidentally shipped their cat in an Amazon return package. It arrived safely 6 days later, hundreds of miles away.
- A centenarian who starts her day with gentle exercise and loves walks shares 5 longevity tips, including staying single
- 2 states where home prices are falling because there are too many houses and not enough buyers
- "To sit and talk in the box...!" Kohli's message to critics as RCB wrecks GT in IPL Match 45
- 7 Nutritious and flavourful tiffin ideas to pack for school
- India's e-commerce market set to skyrocket as the country's digital economy surges to USD 1 Trillion by 2030
- Top 5 places to visit near Rishikesh
- Indian economy remains in bright spot: Ministry of Finance