The Dean of Syracuse University’s Whitman School of Management says the Federal Reserve’s action to increase interest rates by a quarter point is not a surprise, and should be seen as good news. Kenneth Kavajecz says the fed considered masses of mainly domestic economic data in reaching their decision from productivity and price increases to employment and wage growth. He says wages have not grown as one might expect.
"However, on-balance when you look at all the economic data, it really weighs heavily that it is time for the Federal Reserve to start moving interest rates up. The economy is not anemic, the economy is strong enough to withstand the increase in rates. Frankly, it will be better off because of it."
But what does this mean for Central New Yorkers? After all, the rate has been at record lows for seven years. Kavajecz says the benefit now shifts from those who borrow to those who save.
"Those people that are savers, those people that have money put aside in interest bearing accounts are likely to start to see a little more interest in them. That is a concrete thing that people can expect. It certainly isn't going to be very much with .25 point move."
On the other hand, Kavajecz says those with mortgages, car loans, credit card debt, and the like can expect to see interest rates start to rise, but again, very slowly. Overall he says the fed’s action shows the economy is generally strong and getting stronger.
