Consumers May Pay More As Fed Raises Rate

The Federal Reserve's Open Market Committee yesterday increased the interest rate banks charge each other for overnight loans from 2.25% to 2.5%. Many banks have responded by increasing the prime rate they charge business customers, and that has an impact on many consumer rates.

"Financial obligations like credit card rates tied to the prime rate should result in increased consumer rates within one billing cycle," predicts Consumer Help Web president Joan Bounacos. "These rates have been at historic lows for so long that many consumers may not have factored the cost of carrying loans into their budgets. Now is the time to start planning because most economists are forecasting that rates will continue to increase slowly."

A report in today's Washington Post predicts "...the Fed[eral Reserve will raise the rate again by a quarter-point at each of the next two scheduled meetings, in March and May." The paper also states that economists believe that the rate could rise an additional 1.5 percentage points during 2005.

posted by Consumer Help Web Editorial Team at 11:54 AM |