The group in charge of monetary policy at the Federal Reserve, the Federal Open Market Committee, or FOMC, met this week for the third time this year. They voted to keep short-term interest rates targeted between zero percent and 0.25 percent.
The short-term interest rate controlled by the Fed is also known as the federal funds rate. It influences the rate paid to depositors at banks and the interest rate borrowers pay on credit cards and home equity lines of credit.
Though this week's decision was not unexpected, it's disappointing to savers struggling with low interest rates on saving instruments such as CDs and money market accounts.
As this Bankrate story noted earlier this week, CD rates could increase before the Fed hikes interest rates. The federal funds rate isn't expected to move until 2014.
In order for CD rates to increase independent of the Fed, the economy needs to heat up so that businesses start borrowing again. If lending activity speeds up, banks may need more deposits which will force them to offer attractive interest rates to depositors.
Of course, if the economy really gets going, the Fed may raise short-term rates before 2014.
How have low interest rates affected you?
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