What does the Fed actually do? And should you care?

The Fed lowered rates last week.  What does that mean and should you care?

The Fed's job is to 1) keep people employed and 2) keep inflation in check.

They do that by raising or lowering interest rates. 

If they raise rates, they cool down the economy. Overheated economies get too far over their skis which leads to recessions.

If they lower rates, they heat up the economy.  Cold economies (aka recessions) need a little kindling.

But it's like driving a cruise ship.  The effects don't trickle through the economy for 12-18 months.

Last week they lowered rates.  But not because of a cold economy.  They lowered them because the effects of raising rates last year have trickled through and they decided it was too much. We weren't as far over our skis as they thought.

So what does that mean for you?

The bad news is you'll earn less interest in your savings account. Whomp whomp. The good news is you can potentially refinance your mortgage at a lower rate.  Woohoo!

The really good news is that refinancing locks you into the lower rates.

Click here to see to compare mortgage rates and see if you could take advantage. Then talk to your financial planner to see if it makes sense for you.

(And if you don't have one, then contact us. We'd be happy to help.)

DISCLAIMER: This publication is for educational purposes only and should not be considered financial, tax or legal advice. These statements have been simplified for illustration purposes. Consult your financial planner or tax advisor for help with your specific situation.