US Federal Reserve hikes rates to highest in a decade

US Federal Reserve hikes rates to highest in a decade
The Fed raised interest rates on Wednesday, as expected, but it was still low by historical standards.

Dubai - Effects of expected increase will extend beyond corporate America to household budgets

By Staff Report

Published: Wed 21 Mar 2018, 9:07 PM

Last updated: Wed 21 Mar 2018, 11:13 PM

The United States Federal Reserve on Wednesday raised its interest rates to the highest level in a decade, The Washington Post reports.
The move increases costs for borrowers and eases off efforts to stimulate the economy of the world's largest economy.
The Fed's acts raised its key rate from 1.5 per cent to 1.75 per cent, the highest since 2008, although it is still low by historical standards.
Higher Fed rates lead to higher rates for businesses looking to invest or consumers looking to buy cars or homes, which can crimp economic growth but also fight inflation and make the Fed better prepared for a future recession, the Post reported.
The report added that the US central bank also signalled it would raise rates two more times in 2018, part of an ongoing move away from the extraordinary measures it took to boost the economy during and after the previous large-scale recession.
Reuters earlier reported that the effects of the Fed hike will extend beyond corporate America to household budgets.
Most people will see at least a minor impact on their credit card statements in the next few billing cycles, while those with adjustable-rate mortgages, home equity lines of credit, auto loans and other loans with variable rates of interest will be hit hardest.
Credit cards with fixed interest rates and annual percentage rates that don't change for a set period of time won't be immediately affected.
Fixed-rate mortgages are also going to become more expensive, which could have a chilling effect on the real estate market. Higher interest rates typically depress home values by making monthly mortgage payments more expensive.
- With inputs from Reuters

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