The Federal Bank of the United States has increased their interest rate to 0.25 percent on the 16th of December and the European markets have given it a green flag.
How does it affect the common man as well as the industrialists?
Now that the interest rates have been increased by the Federal Bank it is definitely going to bear a number of consequences. The quarter point increase will definitely affect the common people who have mortgages to pay, or some of loan to repay. However, people will also benefit from it on the flip side. Savers and investors will definitely benefit from the rising yields and deposit rates. Plus, industries and companies will have faced higher refinancing cost which is inevitable with the increase in the interest rates. While one may look at it as a very small percentage, by looking at the bigger picture people will realize that things are a lot more different when it comes to the repaying of loans to the bank. This will eventually lead to extra expenses disrupting the budget of most families.
Has the economy improved?
According to a number of renowned economists, it is quite a good move in the positive direction which shows that the economy is improving because of which people will be able to pay extra interest. Others however are of the opinion that it would put more burden and pressure on the common man, because the interest rate increment does not mean that every individual’s pay has increased as well.
Many believe that this will help in the improvement of the labor market and this decision is consciously well timed because the inflation will move back to approximately 2 per cent by the medium term.
How does it affect the world?
It is quite obvious that whatever happens in the U.S.A market affects the rest of the world. While the European market is in favor of this decision, the Asian market has mixed opinions about the same. The next move of Fed will be scrutinized next because it will have a number of implications on the world market. Many economies think this decision will negatively impact the world economy because there will be equal number of winners and losers in this case scenario so the advantage of such a risk will not pay off.
More on the U.S.A economy
Needless to say that the U.S.A economy happens to be one of the strongest in the world and the decision taken by their banks definitely affects the rest of the world. U.S.A devices a number of ways to make lives of its citizen much better just like The New Pension Plans which have been discussed right here.