US interest rates rise by 0.25%

In February 1, 2016
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2817936_sAt the end of 2015, the US Federal Reserve made the decision to raise interest rates by 0.25%, the first rise since 2006.

This move is set to strengthen the Dollar and, as this is a more common currency for trading, the change in exchange rates could see people trying to take advantage of the situation, or at least avoid any negative implications.

The rise in interest rates is likely to have effects across the entire international market place, with this show of confidence in the American economy boosting Eastern and Western economies in turn, and making it more probable that others will follow their lead.

Whilst the Bank of England voted this month to keep our interest rates at 0.5% until late 2016 or early 2017, this move could put more pressure on the UK to bring a rise forward to match the upward movements of the US. As the USA and UK agree that any interest rate rises should be gradual, we will not see a large increase any time soon, but we should be prepared for a slow climb to the desired 2–3% by 2018.

This might not be welcome news to people who have enjoyed historically low costs of borrowing and mortgage rates, but for all our investment Clients, this can only be seen as good news. An eventual rise in the Bank of England interest rate will increase rates offered on your cash based savings and equities markets historically have performed better when interest rates are higher.

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The opinions contained within this blog, do not constitute financial advice and no action should be taken based on this content alone.

Jasmine has been a qualified Financial Planner since 2008. She has also been a member of the Society of Will Writers since 2012. She is passionate about helping Clients build their wealth and achieve the financial lifestyle they desire. Her areas of expertise are that of Savings, Investments, Pensions and Retirement Planning.

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Disclaimers

The Financial Conduct Authority do not regulate, Will Writing, Buy to Let Mortgages, Auto-Enrolment, Tax Advice and Estate Planning. Your capital is at risk. Investments can fluctuate in value and investors may not get the amount back they invest. The guidance and/or advice contained within the website is subject to the UK regulatory regime and is therefore primarily targeted at customers in the UK. https://register.fca.org.uk/

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