The reward for the lowest unemployment rate since 1969? Higher rates for your loans.

Posted on Posted in Financial Trends, Investment & Financing, Investment Niches, Market Updates

It’s all over but the shouting. Interest rates are going up. And up. And up.

That’s what a roaring economy will do. Households and companies are the most confident in years. Consumer spending and business investment are strong. And years of steady hiring have knocked the unemployment rate down to the lowest level since 1969 — an astounding 3.7%.

The reward? Higher costs of borrowing for consumers and businesses.

The economy is doing so well the Federal Reserve has embarked on a path to lift a key short-term U.S. interest rate to at least 3%, pushing them to the highest rate in more than a decade. That will raise the cost of all sorts of other loans.

Oh sure, interest rates are still low, but if you don’t act soon, that home mortgage, auto loan or small-business line of credit is going to cost more. The Fed is on track to raise interest rates again by December.

It’s not just the strong economy that’s pushing the Fed to act, though. What’s accompanied fast economic growth is higher inflation, the archenemy of central banks everywhere.

The latest readings on inflation this week aren’t going to set off any alarms, but they’ll likely affirm that the trend is still up.

 

 

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