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Impact of Low Interest Rates

What Rock Bottom Interest Rates Means for Consumers.

In an unprecedented move on Tuesday, the Federal Reserve said definitively that historically-low rates are here to stay until at least mid-2013, essentially eliminating the possibility of a hike in interest rates for the next two years.

On the one hand, the Federal Open Market Committee’s decision to keep rates low for more than just an “extended period” — as it has previously stated — is an indicator the Fed expects the economy to remain sluggish. That could mean we will see continued high unemployment, low consumer confidence and slow economic growth, all factors that do not give one much impetus to borrow and spend money. 

On the other hand, it has never been cheaper to borrow money; if you can qualify for a loan, now (or sometime before mid-2013) is the time to get one. But personal finance experts caution against making any purchasing decisions based on interest rates, warning consumers it’s important to keep the bigger picture in perspective.

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