The Federal Reserve is widely expected to raise interest rates at its upcoming meeting on December 16-17 2015. This will be the first time the Fed has raised rates in nearly a decade. The last time the Fed raised rates was in June 2006 when the federal funds rate was increased from 5.25% to 5.50%.

The expected rate hike has been well telegraphed by Fed officials in recent months and Fed Chair Janet Yellen has repeatedly said that the central bank plans to raise rates gradually over time. The Fed’s exact plans will be determined at its December meeting but most analysts expect the Fed to raise rates by 0.25%.

The big question for investors is how much higher interest rates will go in the future. The Fed’s plans will be heavily dependent on economic data which has been mixed in recent months. The labor market has shown improvement with strong job growth and falling unemployment but inflation has remained below the Fed’s target of 2%.

In the short-term a rate hike is likely to have a negative impact on stock prices. Higher interest rates make borrowing more expensive which can weigh on economic growth. However the Fed’s rate hike is widely seen as a vote of confidence in the economy and it is expected to have a positive impact on the long-term direction of the stock market.

The Fed’s rate hike is also likely to have a positive impact on the bond market. In the short-term bonds will likely sell off as rates rise. However the Fed has indicated that it plans to pursue a slow and gradual approach to interest rate increases which should give bond prices time to adjust. In the long-term higher interest rates will be a positive for the bond market as they will increase the appeal of fixed-income investments.

How much higher will interest rates go in the future? That remains to be seen but the Fed’s rate hike is a positive sign for the economy and the stock market.

References:

http://www.marketwatch.com/story/heres-how-much-the-fed-is-likely-to-raise-interest-rates-2015-12-14

http://www.cnbc.com/2015/12/14/heres-how-much-the-fed-is-likely-to-raise-interest-rates.html

## How much will the Fed raise interest rates?

Answer: The Fed has not announced how much they will raise interest rates.

## When will the Fed raise interest rates?

Answer: The Fed has not announced when they will raise interest rates.

## How often does the Fed raise interest rates?

Answer: The Fed typically raises interest rates every three months.

## What is the current interest rate?

Answer: The current interest rate is 0.

25%.

## How much will my monthly payment increase if the Fed raises interest rates by 0.

5%?

Answer: With a $200000 loan your monthly payments would increase by about $83.

## How much will my monthly payment increase if the Fed raises interest rates by 1.

0%?

Answer: With a $200000 loan your monthly payments would increase by about $166.

## How much will my monthly payment increase if the Fed raises interest rates by 1.

5%?

Answer: With a $200000 loan your monthly payments would increase by about $250.

## How much will my monthly payment increase if the Fed raises interest rates by 2.

0%?

Answer: With a $200000 loan your monthly payments would increase by about $333.

## What is the highest interest rate the Fed has ever raised?

Answer: The Fed has never raised interest rates higher than 20%.

## What is the lowest interest rate the Fed has ever raised?

Answer: The Fed has never lowered interest rates below 0%.

## What is the biggest factor that determines how much my monthly payment will be?

Answer: The biggest factor that determines your monthly payment is the interest rate.

## What is the second biggest factor that determines how much my monthly payment will be?

Answer: The second biggest factor that determines your monthly payment is the loan amount.

## What is the third biggest factor that determines how much my monthly payment will be?

Answer: The third biggest factor that determines your monthly payment is the loan term.

## Will the Fed’s interest rate increase affect my current loan?

Answer: No the Fed’s interest rate increase will not affect your current loan.

## Will the Fed’s interest rate increase affect my current savings?

Answer: No the Fed’s interest rate increase will not affect your current savings.