Interest rates are going up. The Federal Reserve in June hiked rates for the second time in 2018. And there could be two more rate hikes before the end of the year. Here is how you can take advantage of other positive outcomes from Fed rate increases.
Higher returns for savers
Low interest rates have been a drag on savers. Any improvement, even modest, is welcome.
"Interest rates have been so low for so long that many people have fallen out of the habit of rate shopping," said Robert Frick, economist for Navy Federal Credit Union. "But now that rates are rising they should get back into the habit and will be seeing bigger payouts from their accounts."
Tamed inflation
A positive inflation scenario after a rate increase might include "lower prices of imported consumer goods, due to a likely higher exchange value of the dollar if our domestic rate increases are not matched by policy tightening in other major economies," said Daniil Manaenkov, U.S. forecasting specialist at the Research Seminar in Quantitative Economics at the University of Michigan.
More lending
A credit bubble received some of the blame for the financial crisis in 2007. In the aftermath, lending came to a complete stop. Lending has resumed. "Banks may have a greater incentive to loan out reserves at higher interest rates, and the increased flow of additional credit would boost economic growth," said Sean Snaith, director of the Institute for Economic Competitiveness at the University of Central Florida.
