Last week, Janet Yellen and The Fed released a statement regarding interest rates that left some economists and Fed-watchers puzzled.
After a two-day meeting, Yellen told reporters that The Fed is likely to keep interest rates near zero until April of 2015. She cites “patience” as the reason for slowly raising the benchmark lending rate from a range of zero to .25 percent.
Given recent reports showing overall improvement in the US economy (including 321,000 jobs added and an increase in retail sales), this “slow-playing” of the transition to higher interest rates comes as a bit of a surprise.
What some are quick to forget, however, is the fragility of our recovering economy. After years of slowly nursing it back to health, the last thing Yellen and The Fed want to do is take on too much too soon, potentially plummeting us back into a recession, as seen recently in Japan.
Although a somewhat sluggish report, Yellen is still keeping the future in mind. The Fed is looking for key signs of economic stability before raising the rates, such as a further decline in the unemployment rate, improvement in labor-market conditions and an ideal 2% inflation rate.
So, what does this mean for millennials?
For our investment-virgins, low interest rates, coupled with the prime stock market in December and January, make the holidays a perfect time to start investing at low risk. Why not kick off 2015 with some extra financial security?
For the full story, head on over to Bloomberg.