Last Wednesday, the Federal Reserve announced the end of its bond purchasing program. This announcement concluded a six-year program that began in November of 2008, known as Quantitative Easing, to help aid the economy and stabilize the crippling housing market.
In addition to ending the bond-buying program, the Fed committee announced they will keep interest rates near zero. The committee believes that if interest rates remain low it will encourage consumers and businesses to spend. As our economy continues to improve, the demand for credit will increase and as the demand for credit increases, interest rates will rise over time.
However, for the time being, if you have money in savings at the bank, you will continue to earn little or no interest. Our economy has improved from where it was 6 years ago--last Friday, the S&P 500 and the Dow closed at record high levels. The conclusion of the bond-buying program symbolizes the training wheels being taken off of a youngsters bicycle. There will continue to be gyrations and herky-jerky movements, but it appears our economy may be on the path to sustained improvement.
Ethan Wade, Financial Advisor
(This article contains the current opinions of the author but not necessarily those of Brighton Securities Corp. The author's opinions are subject to change without notice. This blog post is for informational purposes only. Forecasts, estimates, and certain information contained herein should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. References to specific securities and their issuers are for illustrative purposes only and are not intended and should not be interpreted as recommendations to purchase or sell such securities).