Fed To Vote On Interest Rates This Week – What’s At Stake?

There has been much speculation in the market for quite some time regarding whether or not the Federal Reserve will finally decide to implement any changes on the interest rates this year. The Feds’ decision to increase the interest rates has been under discussion for quite some time now, with everyone estimating a change for the past few months. There is talk in the market that the Federal Reserve is ultimately expected to raise the rates this year.

Some economists assert that the Federal Reserve should defer the task of increasing the interest rates until there is more stability in the global markets. Meanwhile, others argue that putting rate hikes aside for a while, the Feds should also take other actions to further stimulate the economy.

It is very important for every investor to know that if the Feds do finally decide to raise the rates, it will have a major impact on the stocks and the portfolio of investors and CD buyers.

If the Feds actually decide on and implement a hike in the interest rates, the biggest change would be an end to an era where the Federal Reserve has only pushed down the rates and not made effort to increase it back. The Feds’ fund rate, which the different banks charge to each other when they need overnight loans, struck 0%, which was 5.25% in September of 2007. The rates have never been able to reach their past position since then.

All banks and different institutions offering financial services would benefit with a hike in interest rates, as the banks are in the habit of increasing the loan rates more frequently compared to deposit rates. This hike in rates will also prove to be of great advantage to retirees who completely rely on their savings.

The utilities segment will be the one most affected with a prolonged hike in the interest rates made by the Federal Reserve. Utilities have comparably high borrowing costs. This means that any investor who had bought dividend stocks, because of low CD rates, would then think about switching over and making investments in Certificates of Deposit.

Investors aspiring to invest in CDs have mulled over their decision for some time, as the Federal Reserve has been reminded and has assured time and again, that it will increase the rate, which would make the Certificates of Deposit a desirable investment choice. With the news that the Federal Reserve is considering making a decision about increasing the rates, investors would eventually want to consider buying CDs.