SALT LAKE CITY — Interest rates are expected to go up this year, but not too quickly nor by too much, experts tell KSL in the final part of our series, “Your Money in 2019.”
About 40 years ago, fluctuation with interest rates wasn’t uncommon. Now, Wall Street goes up or down on whatever word comes from the Federal Reserve about interest rates.
Bankrate analyst Greg McBride thinks there will only be two rate hikes this year: one in the spring and another in the fall.
“I think we’re going to get away with the cadence of expecting a rate hike every three months like clockwork… as has been the case the past couple of years,” McBride says. “I think instead the Fed raises interest rates a couple times this year, but they’re probably a little more spread out.”
McBride says what that likely means for the average American is that it will cost more to borrow money – for example, to refinance a home or get a car loan.
“Rates are still incredibly low, compared to what they can be or what they have been historically,” Shane Stewart, a financial planner with DMBA, says.
Like the tire in your car, Stewart says the economy needs to be inflated properly in order to avoid hyperinflation.
“Things would be going so well that goods and services would be too expensive and go up too much,” Stewart says.
China, too, has a role to play, according to University of Utah finance professor Scott Schaeffer. He says a slowdown in China’s economy reduces demand for American goods and services.
“Right now, it’s not clear whether the Fed has reached a point in combination with weakness in the global economy where it’s going to say, ‘These rates are good,’ or whether there’s going to be continued increases,” Schaeffer says.
For now, experts say it’s a good time to pay down variable interest debts like credit cards and open an interest-bearing savings account — before the next rate hike.
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