Federal Reserve announces first rise in US interest rates since 2008

[MowCowWhoHow III]

Source: The Guardian

The Federal Reserve raised interest rates on Wednesday, ending an extraordinary period of government intervention in the financial markets that started at the height of the recession.

After holding its benchmark federal-funds rate near zero for seven years, the Fed increased rates a quarter-percentage point. The move signals the end of a monetary policy that began amid the worst financial crisis since the Great Depression.

Fed chair Janet Yellen will hold a news conference at 2.30pm ET on Wednesday to elaborate on the decision by the Federal Open Market Committee (FOMC).

Earlier this month, Yellen signaled to Congress’s joint economic committee that the US economy was now strong enough for the Fed to raise rates. The unemployment rate now stands at 5% and economic growth appeared stable, she said.

Read more: http://www.theguardian.com/business/2015/dec/16/federal-reserve-us-interest-rate-rise-fed-funds-janet-yellen

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Breaking - Fed raises interest rates

We have lift off!

As expected policymakers at the US Federal Reserve have raised interest rates by 0.25% to between 0.25% and 0.5%.

It's a big moment as interest rates have been near zero since December 2008 and the last interest rate rise was in June 2006.

The last cycle of interest rate increases began in June 2004.

http://www.bbc.co.uk/news/live/business-35072862

[randys1]

1. Benefits only those who already have money or houses, etc.

[whatthehey]

3. And yet DU constantly says nobody can afford to buy anyway

If nobody can afford a dime after paying for necessities, a ubiquitous refrain here whenever personal finances are mentioned, then the interest rate will mean shit to them because payments you cannot make at 3% and payments you cannot make at 4% are the same damn thing.

What this does help is the seniors with a bit of a nest egg built up over decades, or responsible middle-class working people saving for kids' college funds, who might have a slightly better chance of not having to choose between losing buying power to inflation by getting no interest or taking large risks in the equities and corporate bond markets.

[randys1]

7. a quarter of a point wont help average people, if you have tons of money then it adds up

[whatthehey]

12. If it won't help it won't hurt. After years of zero interest savers deserve some payback.

[Munificence]

15. I am with

you here.

Basically with these policies over the past 8 years we have stolen from "savers" and given it to the banks.

We've forced anyone with even a "crumb" to jump into the stock market. Just wait until it crashes the next time...and it will.

[underpants]

2. A good sign that the economy is in full recovery

[earthside]

11. Or an experiment to see how fragile it still is.

Twenty-five basis points may not be enough to make a difference.

But my concern is that for the majority of Americans the 'recovery' is still pretty much nonexistent.
For instance, despite Obamacare, health care cost still going up especially vis-a-vis stagnant wages and benefits.

Frankly, I don't think the Fed board is much smarter than anyone else in deciphering the future -- so even this small move could slow down the economy.

We will see.

[TygrBright]

4. Any bets on whether banks will raise interest on savings accounts & CDs?

:crickets:

Didn't think so, either...

wearily,
Bright

[progree]

14. No, but borrowers will be paying more starting real soon

Wells Fargo moves fast to raise rates for borrowers, but not on deposits, MarketWatch, 245p ET, 12/16/15

It took Wells Fargo & Co. WFC, +1.71% just 12 minutes to pass the Federal Reserve's interest rate hike on to its customers, as it became the first major bank to raised its prime rate. The Fed said at 2 p.m. ET that it was raising its fed-funds target rate by a quarter percentage point to a range of 0.25% to 0.5%; Wells Fargo said at 2:12 p.m that it was raising its prime rate to 3.50% from 3.25%, effective Thursday.

The bank didn't not announce any change to its rates on deposits, which are up to 0.06% on savings accounts, according to its website.

http://www.marketwatch.com/story/wells-fargo-moves-fast-to-raise-rates-for-borrowers-but-not-on-deposits-2015-12-16?siteid=yhoof2

Banks cheer Fed’s interest rate increase, Wall Street Journal via MarketWatch, 12/16/15

Banks started announcing increases to prime rates shortly after the Fed announcement. U.S. Bank, J.P. Morgan Chase & Co. JPM, +2.16% and Wells Fargo & Co. WFC, +1.71% said they would raise that rate to 3.50% on Thursday.

Consumers likely won’t see a similar increase on their deposits soon. Usually, banks take a longer time to increase the deposit rates they pay to savers when rates rise. Historically, money market mutual funds see yields rise more quickly.

http://www.marketwatch.com/story/banks-cheer-feds-interest-rate-increase-2015-12-16

[RussBLib]

5. it sure would be nice to earn something on savings again

but this won't do it.

What I want to know is why didn't the government offer consumers mortgage rates at or close to zero? If free money is good enough for the banks, why not consumers? Fucking businesses turn around and charge consumers anywhere from 3% to 25% on their free money.

[upaloopa]

6. The government does not have a mortgage

lending business.

It does partially insure FHA and VA mortgage loans.

You could buy a house on a FHA loan with nothing down at between 2.75 and 3.75 interest rate over the last year provided you had a credit score of 740 or higher and proof of steady income and the ability to make the payments.

Yesterday VA and FHA rates were 3.75%

[Lucky Luciano]

10. Mortgages usually are some spread over 10 year bonds.

The ten year note has mostly had s yield in the low 2s - that was not zero because rates were not going to stay zero for 10 years!

[OilemFirchen]

8. Finally.

Looking forward to another .25% in the next quarter.

[LiberalArkie]

9. Might I recommend this link and the link that it originated it

http://www.democraticunderground.com/111674459

An interesting comment at the site is:

Doesnt matter. The FEDERAL RESERVE will raise rates and the DOW will +400 points by the end of the day. This will become the greatest bull market in the history of mankind. The FEDERAL RESERVE will make sure of it.

[mnhtnbb]

13. Dow is currently up 157.97

[westerebus]

16. Blowing a new bubble.

The FED does what it always does. Inflate. Inflate some more. Release undecipherable jargon. Continue to inflate. As the PTB reap record profits.

Boom. Bust. Oh noes, no one saw that coming.

Wash. Rinse. Repeat.