Federal Reserve to raise interest rates — Will this help the economy?

I read a news report stating that the Federal Reserve (The Central Bank of USA) will be increasing the interest rate soon.  It is also mentioned that this is the third time since 2015 that the interest rates are being revised and this may not be the last revision…that is further revision may also be coming soon.

In a way it is a news that is very relevant not only for USA economy but also for other countries.   If the Federal Reserve raises the interest rates, it will help retired people to some extent.  Yes they may be able to get higher return on their investments.   This may bring smile in the faces of retired people.

At the same time this may result in borrowing costs of companies to go up because they will have to pay a higher rate of interest for their borrowings.  This will help Banks to some extent.  This in turn may help the economy which has not been improving considerably.

It is good to have an inflation which is not high.  This will bring interest in people to work, produce more and sell more  This may also increase the share price and market will move higher.

This move in turn strengthens USA dollar and it will help people visiting other countries with their US dollars.  They may be able to buy more in other countries using their dollars.

This may also result in other countries’ central banks revising their interest rate higher.  This will improve the economy of other coutries also to move faster and expect a higher growth.   Yes. I am from India.  We are facing a situation where the deposit interest rates have been steadily coming down.  Now though the deposit nterest rates may not rise considerably, this will crtainly check the downward trend.   If the rates rise and fixed deposit holders like me get a higher interest rate –in turn higher returns this may help us to some extent to beat against the rising inflation  It is true that the pensioners like me get increase but that is not matching the increase in inflation and prices

In India also the share prices will be going up.  Again tis trend will be followed by China economy.  They will also see increase in interest rates and since that country has a higher population consisting of retired people this will help them get more interest.

 

good day.




  • SAMBASIVAN.S.

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    • Yeah. I hear a lot of reports about interest rates and all that jazz too spewing from the mouths of experts on economics and gurus in the financial industry.

      This simple fact is: No Consumer Equals Bad Economy.

      Fiddling with the interest rates may have an impact. But the reality is PEOPLE NEED JOBS!!!

      People need to have productive and profitable work to do and earn consistent income. No matter how humble the employment – maid, cab driver, accountant. People need to work!

      The economy would also improve if executives in charge of corporations would stop making bad business decisions (intentional or unintentional) that screw up the economy in the first place and then they walk away with most of the earnings while making an executive decision to lay off hundreds and thousands of workers. What? It's the poor folks fault? I don't think so!

      For those who have the money – that "loose affiliation of millionaires and billionaires" who live IN ANY COUNTRY – if they weren't being so selfish with their monetary blessings they could turn the economy around and make things better.

      How do I know this? Because I've seen individuals take their wealth and invest in communities and build it up. If that can be done on a small scale, it can be done on a grand scale too. As goes the village, town or city, so goes the country and so goes the world. That's just common sense. It doesn't take a mathematical formula or tampering with interest rates to figure it out! ( CC: @realDonaldTrump )

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