Economy 52,882 Posted June 18, 2015 Share Posted June 18, 2015 http://www.reuters.com/article/2015/06/17/us-usa-fed-idUSKBN0OX2DX20150617 The US Federal Reserve (Central Bank) says they are on track to raise interest rates at least once this year possibly twice as the economy finally looks like it is ready for rate hikes US Benchmark is still at 0%. The plan was to raise it in 0.25% increments per meeting (which happens roughly every 1.5 months) and the rate hikes should begin in the second half of this year. This is a big deal because there has been no rate hikes in the US for 8 years now. They droped and droped till they hit 0% where they have been for 6 years now. People who have become accustomed to cheap credit and piled on tones of debt may feel a strong stink as credit becomes more expensive. Link to post Share on other sites More sharing options...
Woolfsmck 2,763 Posted June 18, 2015 Share Posted June 18, 2015 Since I have some income 'from' interest ...I like it...8-) like a cat in a sil, I observe life, moving and still. My words give a clue,look inside to see whats true Link to post Share on other sites More sharing options...
Economy 52,882 Posted June 18, 2015 Author Share Posted June 18, 2015 Since I have some income 'from' interest ...I like it...8-)that depends... what kind of income? bonds or savings accounts? Link to post Share on other sites More sharing options...
Woolfsmck 2,763 Posted June 18, 2015 Share Posted June 18, 2015 Bonds rates won't change right away. But lending ... like a cat in a sil, I observe life, moving and still. My words give a clue,look inside to see whats true Link to post Share on other sites More sharing options...
Economy 52,882 Posted June 18, 2015 Author Share Posted June 18, 2015 Bonds rates won't change right away. But lending ...i ask because when interest rates rise, so do bond yields... and when bond yields rise, their market price actually drops... so a bond fund will often actually drop in value during a period of rising interest rates. Thats true especially now because rates are so low, that interest gains may be insufficient to cover reductions in its price value of course, if a bond is held to maturity, your garanteed your principal and interest back... but if you were to sell it early at market price, youd loose money each individual bond varies tho of course. You can even see this across different bond categories like Government bonds, corporate bonds and high yield bonds (high risk) they go in tandem a little differently but are affected by general interest rates Of course the negative effect on bond funds from rising rates is temporary. OVer the long term they benefit because reinvested money later will yield more... If you hold money in savings accounts or whatnot, it shouldnt take too long to get higher income after rates do go up Im generalizing tho... each individual bond, or individual investment wont necessairily follow the general market in perfect tandem. Link to post Share on other sites More sharing options...
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