What the Fed Rate Hike Means for the Municipal Market

fed-reserve-interestWhat the Fed Rate Hike Means for the Municipal Market
The Federal Reserve is raising short-term interest rates for the first time in nearly a decade.

BY LIZ FARMER | DECEMBER 17, 2015

Short-term interest rates will be rising for the first time in nearly a decade, the Federal Reserve Board announced Wednesday. The move means mixed results for the states and localities that borrow money in the municipal market.

Citing “considerable improvement in labor market conditions this year,” the board announced a scheduled rate hike of one-quarter percent starting in 2016. It would be the first of several small rate hikes, meaning interest rates could rise by more than 1 percent a year from now. In a statement, the Federal Open Market Committee said it is “reasonably confident that inflation will rise over the medium term to its 2 percent objective.”

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