Today’s Interest Rate Overview

Interest rates are determined by several factors, including economic conditions, government policies and inflation. Knowing what the current interest rate trend is can help you decide whether to invest or borrow money, or even compare loan products to get the best deal. In this article, we will take an overview of current interest rates and provide an insight into what influences the rate you can expect to pay.

Interest Rate Policies of the Federal Reserve

The Federal Reserve, or the “Fed” is the body responsible for setting most of the central economic interest rates in the United States. The Fed sets these rates to influence the amount of money people and businesses borrow, which in turn affects economic growth and inflation. These rates impact lending products such as mortgages, loans and savings accounts and are therefore very important for consumers.

At the time of writing, the Fed’s primary interest rate is set at the range of 0.00-0.25%. This rate is known as the federal funds rate, and affects the interest you pay on loans and the rate you can earn on saving accounts.

The Impact of Low Interest Rates on Borrowers

With interest rates at record lows, borrowing money today is more affordable than ever before. This environment has been a boon to homeowners, who can take advantage of low fixed-rate mortgages and refinance when interest rates dip even lower.

In addition, those planning to apply for a loan can find very attractive rates on personal loans, car loans and other consumer debt products. This is good news for consumers but can be tough on lenders and banks.

The Impact of Low Interest Rates on Savers

Unfortunately, savings rates have also been adversely affected by low interest rate policies. With the federal funds rate so low, banks and other financial institutions have no choice but to offer low interest rates on their savings accounts. This makes it difficult to grow your money through savings, as the rate you can earn on these accounts is often lower than the rate of inflation.

Nevertheless, there are some programs designed to help savers achieve stronger returns on their savings accounts, such as high yield savings accounts and certificates of deposit (CDs).

Looking Ahead

The U.S. government has signaled its intention to keep interest rates low for some time, so those in the market for a loan or a new savings account should take advantage of the favorable environment while it lasts. Of course, economic conditions and the Fed’s policies can change on a dime, so it’s important to follow the news updates closely to know what to expect in the future.