Yesterday, for the first time since June 2006, the Federal Reserve raised its key interest rates from 0% to 0.25% to a range of 0.25% to 0.5%. The rise was based on the central bank’s belief that the U.S. economy is much stronger now. Unemployment is at 5%, half of what it was at the worst point of the economic crisis, and is expected to be at 4.8% by next year. Wages are also beginning to increase.
This rate rise affects many people such as savers, who have not earned interest off of a savings account since 2008. Gradually, they will begin to earn interest over the next few years. For home buyers, interest rates are predicted to start rising slowly and gradually.
Many expect that this is the first of more rate increases to come in 2016.