Fed Hikes Rates Again

The Fed is at it again. For the sixteenth time in the latest series that started in June of 2004, they've hiked the Fed Funds Rate by .25%. Why are they hiking rates? Only to keep the economy from growing too quickly, which can result in inflation and drive prices higher on the goods and services we purchase and use every day. Equally important to the rate hike itself was the Policy Statement from the Fed, which is always dissected and analyzed very carefully, as it often gives clues as to the likelihood of future rate hikes. The Fed statement indicated that although inflation appears to be controlled at the present time, further rate hikes may be needed. However, they stressed that the economic news over the coming weeks would be watched very closely in that decision making process.

So what does this mean to you, your friends, family, coworkers and clients? Here's the scoop.

The Fed Funds Rate impacts many things&and it directly affects the Prime Rate, which most Home Equity Lines of Credit are based on. It is also closely tied to the index of many Adjustable Rate Mortgages. A large number of Americans have either a Home Equity Line of Credit or an Adjustable Rate Mortgage&or may even have both. Those rates and indices just jumped again, which may be putting pressure on making monthly payments, or causing concern as to where that rate might go in the future. Moreover, there may be better financing options.