RateAPY

Rumors Fly Over A Key Interest Rate For Banks

Posted by: RateAPY Bank Rates News
March 19th, 2010

The stock market fell in response to rumors that the Federal Reserve might raise the discount interest rate today (the discount interest rate is the fee banks pay when they borrow money from the Federal Reserve). The Feds raised the discount interest rate last month from 0.500% to 0.750%, sending a signal to the market that tightening is beginning.

According to Peter Boockvar, an equity strategist at Miller Tabak & Co. in New York, “The possibility of a discount rate hike would never leak out of the Fed.” Even though the rumor likely started outside of the Federal Reserve, futures traders increased their bet that the FOMC will raise the Fed Funds Rate at the November 2-3 meeting from 66% to 80% likely.

Any increase in interest rates will likely affect the yields you can earn on your savings accounts, money market accounts and certificates of deposit. Keep up with the most recent economic news so that you know how much interest you can expect to earn from your investments.