Interest Rate Hikes Coming This Year? What that Would Mean
One economic analyst sees a continued volatile stock market ahead, spurred on in part by interest rate hikes.
Chief Financial Analyst Greg McBride of Bankrate.com expects a round of hikes around March and another over the summer. He expects those hikes to be about a quarter percentage point each.
"By the end of the year, you are looking at a rate that could be half a percentage point higher than where you started the year," he said.
McBride's economic analysis of this year also foresees continued stock volatility and a significant economic slowdown at the end of the year. For most of the year, however, the economy will deliver respectable growth.
McBride says the rate changes mean savings will earn more.
"If you are a saver, rising rates are a good thing. You really suffered for a decade when interest rates were near-zero levels. But now that the economy has continued to get better and improve, the Federal Reserve has been nudging the bench mark rate higher."
He says that has translated into higher rates on savings accounts, higher yields on certificates of deposit and other income-producing investments.
But credit card rates, and eventually mortgage rates, will rise.
"Over the last several weeks, mortgage rates have actually pulled back to levels that we had last seen over the summer, well below the 5 percent that we had been over during the fall. Here is a good opportunity right now but it is not one that I expect to last because I think that when the clouds part and we see the economic skies as sunny once again, rates are going to resume that march higher."