Whenever there is a meeting regarding a Federal Reserve interest rate hike, there is a lot of spur in the financial world. There are advantages and disadvantages of the same. Aiming at positive developments for the economy, this year’s Federal Reserve interest rate hike indicates the following:

Higher interest rates on savings account

If the economy is well under control, and the rates are hiked, then a chance of better returns shows up. There are higher interest rates which can be taken advantage of, and a lot of funds see a positive hike. Your portfolio will offer more returns. If you have been saving as a part of your routine, then you surely will see an increase in returns from most of the funds.

Lending by banks can be done frequently

After the great financial crisis of 2007 that had hit the banks, it became very difficult for the banks to maintain an equilibrium between earning and loaning out their reserves. It affected the consumer and the financial institutions. But, since then the interest hikes have really helped banks get on their feet. The lending has started again as banks are in a position to loan out the reserves at attractive rates.

Higher income for retirees

With a hike in the Federal Reserve interest rate, this is the best time that retirees have witnessed in terms of higher income.

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Dollars value increased for a better purchasing power

As the dollar rate increases import-export business flourishes. Also, since there is a positive growth in the interest rates by the fed, there is a constant hope that the graph will only rise up in the future, ultimately increasing the power of a dollar. The dollar ends up having a lot more purchasing power as compared to other currencies and becomes a strong weapon for garnering advantages through foreign exchange.

Better scope for selling houses

Higher interest rates are just the first step towards a higher mortgage rate. Prospective buyers would want to take advantage of the best available mortgage rates which give home sellers and owners a huge advantage. Once the demand for a house increases, the scope for selling it at great prices increases too.

Possibility of controlled inflation

If the Federal Reserve is in a place to increase the interest rate, then we can gauge easily that the inflation is under control. Since the outcome of all main Federal Reserve meetings in the past has been positive, it is easy to say that inflation is in the hands of the authorities, which is a positive sign for the economy.

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