LOS ANGELES, CA (PR Newswire) DECEMBER 18, 2015 – Fed gives banks 25 basis points for the holidays. What is the impact on SBA lending?
What is the federal funds interest rate?
The federal funds interest rate is the interest rate that banks and credit unions lend funds maintained at the Federal Reserve to one another.
Why did the federal funds interest rate increase?
In her opening statement, Janet Yellen, Chair of the Board of Governors of the Federal Reserve System, stated that the federal funds interest rate hike “marks the end of an extraordinary seven year period,” a time in which we experienced the “worst financial crisis and recession since the Great Depression”.
Over these seven years, we have seen much improvement: countless jobs have been restored, incomes and household spending have drastically increased, and the housing sector has significant improved.
With a 5% unemployment rate and the economy back on the upswing since the recession, the increase in the federal funds interest rate is the first step toward a normal monetary policy. Yellen stated that the increase is intended “to keep the economy moving along the growth path it’s on.”