The Federal Reserve made its policy decision this week and chose to keep interest rates unchanged for now. This marks the end of a long period of historically low interest rates that began back in December 2008, during the Great Recession.
The decision to maintain low interest rates was widely expected. It had been clear since the Fed’s June meeting that the central bank was more likely to keep rates at near-zero levels for an extended period of time, as they continued to closely monitor the economic outlook. With the employment situation in flux and other economic indicators remaining weak, it had become clear that maintaining the status quo was the safe bet.
The decision to keep interest rates steady was praised by many, as low interest rates tend to stimulate economic activity. Businesses are more likely to borrow money and finance large projects, direclty injecting money into the economy. Lower loan rates also give consumers more buying power, allowing them yo finance large purchases such as cars and homes.
Of course, not everyone is a fan of low interest rates. For one, savers don’t benefit from low interest rates, as they are not able to earn as much from their investments. Some industries can also suffer, Such as insurance companies that rely on higher interest rates to maintain their profits.
The Fed’s decision this week is an indication that it may keep interest rates at near-zero levels for some time. This would be in line with the Fed’s stated goal of maintaining economic stability, as they continue to closely monitor the situation. For now, at least, low interest rates are here to stay.