Fed pledges to keep the cost of borrowing at rock bottom for years to come
The Federal Reserve left interest rates unchanged when it wrapped up their two-day meeting on June 10. The U.S. central bankers unanimously voting to leave its benchmark borrowing rate in a target range of 0-0.25 percent. The Fed is prepared to keep borrowing costs pinned at near-zero through at least 2022. This suggests that the financial system will need support. Long after the pandemic-induced downturn ends, support will be required as the economy rebounds from the worst economic crisis in generations.
The U.S. economy has been officially declared as being in a recession by the National Bureau of Economic Research’s Business Cycle Dating Committee. This news comes as no surprise months after the coronavirus pandemic upended the global and domestic economy. Virtually overnight, the economy was transformed into the worst downturn since the Great Depression.
*Boosting your emergency savings:
Now is the time to prioritize building up a cushion of cash. No one knows just how long the financial hardship will last. Focus on stashing away funds into a liquid and accessible savings account that offers a competitive rate.
*Find ways to trim your expenses:
Find some breathing room in your budget for your emergency savings by trimming your discretionary purchases. Reach out to lenders, banks, and companies you work with to see if you can lower your monthly payment. If you’re carrying credit card debt, consider utilizing a balance transfer card to lower your monthly payment and total interest. Homeowners should consider refinancing their mortgage to shave a few hundred dollars off their monthly payments.
*Focus on the long term:
Markets have rebounded since March, but choppy days could be on the horizon. Don’t jeopardize your long-term investments or savings goals based on short-term events. Dropping out when the waters get rough is a sure way to lock in a loss.