Federal Reserve Raises Interest Rates to 4%

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For the second time in three months, the Federal Reserve increased its benchmark interest rate a quarter of a point, to 4% up from 3.75%.


This past December, the benchmark interest rate was increased to 3.75% from 3.5%. As we noted in our December News Alert, the benchmark interest rate determines how much it costs for financial institutions to lend to one another. When the rate rises, so does the cost of borrowing for the banks, which in turn gets passed along to the consumers as increases in interest rates related to credit cards, auto loans, mortgages, and many other types of financial products.


In response to this latest increase, banks have announced that they have increased their prime rate to 4% from 3.75%. This rate increase can not only have an effect on future mortgage rates, credit card rates and car loans, but it can have an effect on your loan and factor agreements, now is a good time to see if you have any increases in your monthly debt. 


Banks that have already increased their rate to 4%, since the Federal Reserve increase, include PNC Bank, M&T Bank, BB&T Bank, Citibank, and Wells Fargo Bank.


The market currently expects the Fed to hike two more times later this year, in June and again in December. As more information about interest rates unfolds, we will continue to share it with you.


If you have any questions regarding the interest rate increase, please feel free to contact our office.


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