US raised interest rate: what does it mean

16 December The Federal Reserve System (FRS) raised the federal funds rate, setting it at the 0,25-0,5% annual range. This is the first time since 2006.

The interest rate hike was a welcome development. The move is a sign of economic recovery after the Great Recession. The Central Bank believes that the American economy has strengthened and no longer needs “crutches.”

The rate change will impact millions of Americans, including investors, home buyers and savers. The latter will benefit the most - their bank deposits will increase and mortgage rates will rise.

During the financial crisis in December, the Fed lowered the interest rate to 2008-0% in December to stimulate economic growth. The rate hike collapsed the real estate market.

Keeping rates at a record low for seven years did not give an explosive increase in the US economy, but, nevertheless, the American economy is slowly but nevertheless growing.

And the unemployment rate is 5% - this is two times lower than in the worst year for employment in 2009, when unemployment reached 10%. Since then, more than 12 million new jobs have been created.

As Forum wrote earlier, increases the number of not only jobs, but also the salary of employees. The average hourly rate in the US increased by 2,3% compared to last year. Those who are still looking for work can use our instructions on how to find and what you need to take into account.

Economists in the course of 2015, several times assumed that the Fed would start raising rates, but the US monetary authorities decided to do so only by the end of the year. It is believed that in early summer, weak rates for GDP for the first quarter prevented a rate hike, and in September - the financial crisis in China.

Increasing the base rate may lead to a slowdown in US inflation and an increase in the dollar rate. This will affect both the currencies of other countries, including Russia, and in the commodity market, where trading takes place in dollars.

However, Russia's Economic Development Minister Alexei Ulyukayev saidthat the rate hike by the Americans should not cause “serious macroeconomic shocks,” since the Fed’s decision was expected and “everyone was preparing for it.”

According to Vox.comIn the next few years, you can wait for the next increase in interest rates. However, the Fed has already hinted that the authorities will not be too in a hurry with further decisions. This, in their opinion, could slow down the still fragile recovery of the economy.

CNN Money, predicting a rate hike, singled out Four reasons why in 2016 is best to buy a house. And in San Francisco on the eve of a rate hike started selling home loans without down payment.