top of page

How the Federal Reserve's Decisions Impact You

federal reserves

The Federal Reserve's ability to change interest rates is a very important tool for managing the U.S. economy. While the decision to raise or lower rates is complex and data-driven, it has ripple effects on individuals, businesses, and the broader economy.

Paying attention to the Fed's rate decisions and understanding their implications is crucial for anyone interested in personal finance, investing, or the overall health of the U.S. economy.

We want to keep you informed about how decisions by the Federal Reserve, often referred to as the Fed, can impact your financial well-being.

1. Borrowing Costs: When the Fed keeps interest rates unchanged, it means the cost of borrowing money (e.g., mortgages, auto loans, and credit cards) remains constant, which makes borrowing more affordable and predictable for consumers.

2. Savings Rates: Unchanged rates may lead to stable or slower increases in savings account and CD rates, affecting interest earnings and preventing rapid declines in savings returns.

3. Housing Market: Stable rates support the housing market, making homes more affordable for potential buyers as mortgage rates generally align with the federal funds rate.

For example, paying for a $600,000 home at 6% rate over a 30 year period will have you spending about $3,597 a month. In comparison, at a 4% rate, you will be paying $2,864, making your savings $264,000 in interest over 30 years.

Click here to view an interest rate calculator.

4. Inflation and Purchasing Power: Keeping rates unchanged amid rising inflation may impact purchasing power, as inflation erodes the real value of money.

5. Consumer Confidence: The Fed's actions can influence consumer confidence, fostering a sense of security and potentially increasing consumer spending.

Keeping this in mind, remember that there is a light at the end of the tunnel. Not changing the rates might mean that we may see a decrease or plateau in high rates soon.*

For more information about The Federal Reserve, please click this link. *While we're here to share general information that can help improve our Member’s financial lives, we are not a financial advisors and we recommend strongly you contact your personal advisor for further advice.


bottom of page