JACKSONVILLE, Fla. — The Federal Reserve announced Wednesday they are hiking interest rates by 25 basis points in an effort to combat high inflation rates.
“You look over the last year; the Fed’s target rate is 2%. And I think the last report came in at 3.4%. Much has to do with the U.S. and Iran,” said Tim Dahlberg, Financial Advisor for Burns Estate Planning & Wealth Advisors. “Why is that important? Because the longer that it stays, interest rates stay higher; it affects a lot of things. That affects the consumers, affects businesses.”
Dahlberg says you might want to consider holding off on major purchases if possible.
“Maybe if you’re just talking about mortgages, maybe it’s a perfect house, yes, and you can refinance down the road. But you might want to consider, ‘is it going to be something that you can afford to put in your budget?’ That’s always one of the big things,” said Dahlberg.
However, Dahlberg says there is one positive to consider with these rate hikes… It’s their impact on savings accounts.
“With the interest rates going up, you get higher interest on your savings. You get higher interest on your money market. You get a higher yield, which is one positive. So, for a lot of people that are out there, we kind of tell them, look, just make sure what’s in the bank account, make sure it’s not sitting in cash. You got to have it invested because if you’re not keeping up with the inflation, you’re just losing money safely,” said Dahlberg.
Dahlberg also says that if you have any financial questions on how to navigate these rate changes, contact a financial advisor.
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