Cost To Borrow Rises With Rates...

Cost to borrow rises with rates, from The Arizona Republic reports that the anticipated Fed action today would lift the federal funds rate by one-quarter of a percentage point to 5.25 percent. That would be the 17th such increase since the Fed began to tighten credit in June 2004. This step would leave both the funds rate and the prime rate at their highest points in more than five years. Before the Fed's series of increases, the prime rate stood at 4 percent and the funds rate was at 1 percent. It was a boon for borrowers, a bane for savers. Those extraordinarily low rates were needed to help brace the economy after the stock market bubble burst, the 2001 recession set in, terrorists struck the U.S. and accounting scandals rocked Wall Street.



http://www.azcentral.com/arizonarepublic/business/articles/0629fed0629.html