Fed keeps rates unchanged

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Market Zone

The DOW finished at a high of 27,907.43 up +25.71 gain or 0.09%

The S&P 500 finished at a high of 3,141.36 up +8.84 gain or 0.28%

The NASDAQ finished at a high 8,652.23 up +36.15 gain or 0.42%

The Russell 2,000 finished at a high 1,631.88 up +0.16 gain or 0.01%

These gains are the result of the Federal Reserve Board decision to leave the Fed Fund Rate the same at 2.25%.

What this means to you?

The Federal Reserve’s (the Fed) left rates unchanged today. This presents an opportunity to reassess your financial situation as we head to 2020. Since interest rates are holding steady, it’s time to get rid of  debt (or at least pay it down. It’s also time to your boost savings (according to Greg McBride of bankrate.com).

The Fed rate has raised rates nine times in the past three years. A slowing global economy a U.S. – China trade war caused the Fed change course. The Fed has cut rates three times in the past five months.

The Fed’s moves have impacted consumers. Lower rates mean cheaper loans for your:

  • Mortgage
  • Home equity loans
  • Credit card balances
  • Student loans
  • Car payments.

It’s time to look at your savings and your debt from January 2019 to December 31, 2019. Have you made a dent in your debt and an increase in your savings.

The Fed decisions did the following:

Credit cards

Most credit cards have a variable rate. Credit card rates are now hovering between 17% and 19%.

When the Fed cut short-term rates, credit card rates went down too

Reach out to your issuer and ask for a break in your interest rate.

Saving

With the Fed’s lower rates, savers won’t  see higher saving rates. You may be better off using on-line banking which offer higher yields.

Mortgages

The economy and inflation all influence long-term fixed mortgage rates. Mortgage rates are lower since the end of last year. You may want to refinance to a lower interest rate. Adjustable-rate mortgages will not see any changes those rates. Watch your Home Equity Line Of Credit as your monthly payments may see a change in the next two billing cycles. ARMs reset yearly, HELOC could adjust in two months.

Auto loans

If you are planning to purchase a new car the Fed’s decision will not have any effect.

Student loans

If you have both federal and private loans, you should pay off your private loans first or refinance them to lock in a lower rate.

Investors are bracing for a busy week as the U.S. and European Central Banks are holding their policy meeting.

Stay tuned

Robert L Woods (a.k.a. R. LaMont W.)

Robert L Woods

Robert L Woods

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About Me

Robert L. Woods is the retired partner of the Institute For Fiduciary Education (www.ifecorp.com) that provided investment seminars for public and private pension funds, endowments and institutional fund managers. He spent 28 years working for the State of California, as a budget and financial analyst which includes 16 years as an Investment Officer for the California State Teachers’ Retirement System (CalSTRS). At CalSTRS, he established it as one of the nation’s first institutional home loan programs with a down payment assistance component. He also spent 13 years on the Board of Trustees for the Sacramento County Employees Retirement System (SCERS). He was a Trustee with the University of California, Davis, Cal Aggie Alumni Association and a member of the Chancellor’s Council on Community & Diversity. He is a Life Member: Phi Beta Sigma Fraternity, Inc., Theta Gamma Sigma Chapter, Sacramento, CA.

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