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The Federal Reserve raised benchmark interest rates. That's mostly a good thing.by Circa News
Issues

The Federal Reserve raised its benchmark interest rates for the second time in three months. Though the move is a reflection of a consistently solid U.S. economy, that means rates on some consumer and business loans will increase, according to the Associated Press.

The quarter-point raise brings the Fed's rate from .75 to 1 percent.

"The economy continues to expand at a moderate pace," Janet Yellen, the Federal Reserve chair. "Solid income gains and relatively high levels of consumer sentiment in wealth have supported household spending growth. Business investment, which was soft for much of last year has firmed somewhat and business sentiment is at favorable levels." 

She added that she expects the economy to expand in similar patterns in the next few years.

WATCH | Increasing interest rates are a sign of a solid economy.

The meager increase should have minimal effect on mortgages, or auto and student loans since the central bank doesn't directly affect those rates in the short run. However, some loans, such as credit cards, home equity loans and adjustable-rate mortgages, are expected to rise.

All in all, the adjusted rate is a sign that the U.S. economy no longer needs to rely so much on the Federal Reserve because consumers and businesses can afford to pay more to take out loans.

The simple message is the economy is doing well. We have confidence in the robustness of the economy and its resilience to shocks.

Janet Yellen

It's expected that the interest rates will increase two more times this year.

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