What does the Federal Reserve rate hike mean for 2016?

December 16, 2015 7:35 PM

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What does the Federal Reserve rate hike mean for 2016?

For the first time in seven years (to the day), the Federal Reserve changed the target federal funds rate, the percentage of interest paid between banks that are borrowing from one another to maintain reserve balances with the Fed. That's the short version of a very long description of how the interest rate overlaps with the economy, but there's a shorter, more clear version still: The interest rate is a key lever the Fed uses to help guide America's economic growth or contraction.

In other words, for the first time since Barack Obama took office, the Fed is moving that lever -- which should change how the economy looks over the medium term. With a presidential election looming, it's worth considering what that means.

Also read: Trump inherits Obama boom

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