📈 Explaining Why The Fed Raises Rates

Saturday,
March 19, 2022

Top Story

The Week in Review

• The Federal Open Market Committee had its two-day meeting. The FOMC made an announcement regarding a change to the Fed’s target rate, which is how banks and depository institutions determine what to charge when lending each other money.

• The central bank’s decision to raise short term interest rates by 25 basis points was not a surprise But its outlook is decidedly more aggressive than what some economists had anticipated. The Fed indicated it could hike rates six more times before the end of 2022 in response to rising inflation that’s growing at its fastest pace since 1982.

• Inflation continues to weigh on the economy, with producer prices up 10% year-over-year in February While the monthly reading came in a tick lower than what some analysts expected, the annual growth highlights the upward pressure on prices during the previous 12 months. In January the PPI showed a 9.7% rate of annual increase.

For more economic news and how it affects your money, visit the SoFi app.

Credit History Length And Your Credit Score: What You Need to Know

You’re not born with a credit history; it has to be built over time.

Once good credit has been established, using it wisely and responsibly can offer flexibility and freedom. Lenders like to see that you’re an experienced, responsible credit user, which is why your length of credit history accounts for 15% of your credit score.

Lenders want to see accounts maintained in good standing for a long time. When debt accounts are closed, though, that history ends, and eventually closed accounts drop off the credit report entirely. A credit history looks better when it has a solid number of accounts in good standing that have been open for a long time.

One way to achieve this is to keep old credit cards open, even those not being used much anymore. Keeping these cards open, perhaps using them to automate a few bills like car insurance or a monthly subscription account, will signal that they are still very much in use. Paying them off on time and in full is still important to the health of a person’s credit. It might be wise to consider closing a card not being used regularly if the annual fees are so high that it isn’t worth it to keep the card open.

Track your credit score for free in the SoFi app, where the factors affecting your score are broken out to make them easier to understand.

This Week’s Top Stories

Consumers are bracing for even higher prices as supply-chain and geopolitical troubles may limit the effectiveness of Fed rate hikes. From gas to groceries, everything seems to cost more these days.
Inflation was the hot topic at the Federal Reserve’s meeting this week. Consumers will pay more for debt, but may see long-term benefits if Fed policy succeeds. Inflation reduces buying power, so even as wages increase, you still might find you can buy less with your income.
Read more >>

Although the actual news of a 25 basis point rate hike was widely expected, as usual the devil is in the details.
Simply put, we are walking a tightrope. SoFi’s Head of Investment Strategy walks us through why she thinks the Fed is right to focus on inflation, even if their actions cause near-term negative effects.
Read more >>

The global sleep aid industry is expected to grow to $112 billion by 2030. This includes everything from sound machines and bedding to sleep labs and wearable tech that monitors users overnight. Google (GOOGL), Apple (AAPL), and Samsung are all competing in the same space.
Research shows 58% of Americans don’t get enough sleep — and the effects can be devastating. Everything from heart disease to Alzheimers has been linked to sleep disorders, as well as things like damaged personal relationships. Estimates say it costs the US economy $400 billion a year.
Read more >>

Deep Dives from SoFi Learn

With gasoline and home heating oil prices surging since the Russian invasion of Ukraine, consumers are looking for ways to cut their gas bills.
Consumers can save money on gas and heating oil expenses by embracing energy efficiency. Learn how you can help offset these costs amid the war in Ukraine.
Read more >>

When the Fed raises rates, it leads banks to increase interest rates on savings accounts and certificates of deposit (CDs) to entice depositors to put more cash into the bank.
Investing in CDs can provide an interest rate premium in exchange for depositing cash for a predetermined period. Here’s a look at how they work.
Read more >>

Recessions tend to have a wide-ranging economic impact, affecting businesses, jobs, everyday individuals, and investment returns. But what are recessions exactly and what kind of long-term repercussions do they tend to have on personal financial situations?
Here’s a deeper dive into these economic events and how to best prepare for recessions.
Read more >>

Please understand that this information provided is general in nature and shouldn’t be construed as a recommendation or solicitation of any products offered by SoFi’s affiliates and subsidiaries. In addition, this information is by no means meant to provide investment or financial advice, nor is it intended to serve as the basis for any investment decision or recommendation to buy or sell any asset. Keep in mind that investing involves risk, and past performance of an asset never guarantees future results or returns. It’s important for investors to consider their specific financial needs, goals, and risk profile before making an investment decision.

Diversification is not a guarantee of protection from loss. SoFi can’t guarantee future financial performance.

The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. These links are provided for informational purposes and should not be viewed as an endorsement. No brands or products mentioned are affiliated with SoFi, nor do they endorse or sponsor this content.
Communication of SoFi Wealth LLC an SEC Registered Investment Adviser
SoFi isn’t recommending and is not affiliated with the brands or companies displayed. Brands displayed neither endorse or sponsor this article. Third party trademarks and service marks referenced are property of their respective owners.

Important: Bitcoin and other cryptocurrencies aren’t endorsed or guaranteed by any government, are volatile and involve a high degree of risk.

Third Party Trademarks: Certified Financial Planner Board of Standards Inc. (CFP Board) owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™, CFP® (with plaque design), and CFP® (with flame design) in the U.S., which it awards to individuals who successfully complete CFP Board’s initial and ongoing certification requirements.

SoFi Relay offers users the ability to connect both SoFi accounts and external accounts using Plaid, Inc.’s service. When you use the service to connect an account, you authorize SoFi to obtain account information from any external accounts as set forth in SoFi’s Terms of Use. Based on your consent SoFi will also automatically provide some financial data received from the credit bureau for your visibility, without the need of you connecting additional accounts. SoFi assumes no responsibility for the timeliness, accuracy, deletion, non-delivery or failure to store any user data, loss of user data, communications, or personalization settings. You shall confirm the accuracy of Plaid data through sources independent of SoFi. The credit score is a VantageScore® based on TransUnion® (the “Processing Agent”) data.

Terms and conditions apply. SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. Please note that any friend whom you’d like to refer must use your specific referral link to sign-up or apply for the product
they want. Only one referral reward and one welcome bonus per new customer: you will not receive multiple referral bonuses for the same friend taking out multiple loans or products, nor will your friend receive multiple welcome bonuses for taking out multiple loans or products. SoFi Home Loans are never eligible for the SoFi Referral Program. Eligibility: Not available to residents of Vermont. No funding bonus paid to borrowers who reside in Ohio. Must be of the legal age of majority in the state in which they reside. SoFi employees are not eligible to participate in this Program. Further, iIn order for the Eligible Loan Recipient to receive their Loan Welcome Bonus for a SoFi Personal Loan, the loan must still be an
active loan in good standing ninety (90) days after the disbursement date. See additional
eligibility requirements per product in the Official Referral Program Rules .
Referral Cap: In no event will any person be entitled to receive more than $10,000 in cumulative referrals or welcome bonuses under The Referral Program within any calendar year. Referral Bonuses and Welcome Bonuses are each considered miscellaneous income and may be reportable to the IRS on Form 1099-MISC (or Form 1042-S, if applicable). Recipient is responsible for any applicable federal, state or local taxes associated with receiving the bonus offer; consult your tax advisor to determine applicable tax consequences. Additional terms and conditions apply. See the Official Referral Program Rules for details

Apple, the Apple logo are trademarks of Apple Inc., registered in the U.S. and other countries and regions. App Store is a service mark of Apple Inc. Google Play and the Google Play logo are trademarks of Google LLC.

234 1st Street, San Francisco, CA 94105

Terms and Conditions Apply. SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. To qualify, a borrower must be a U.S. citizen or other eligible status and meet SoFi's underwriting requirements. Not all borrowers receive the lowest rate. Lowest rates reserved for the most creditworthy borrowers. If approved, your actual rate will be within the range of rates listed above and will depend on a variety of factors, including term of loan, evaluation of your creditworthiness, years of professional experience, income, and a variety of other factors. Rates and Terms are subject to change at anytime without notice and are subject to state restrictions. SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers, or may become available, such as Income Based Repayment or Income Contingent Repayment or PAYE. Licensed by the Department of Financial Protection and Innovation under the California Financing Law License No. 6054612. SoFi loans are originated by SoFi Lending Corp. or an affiliate, NMLS # 696891. (www.nmlsconsumeraccess.org)

✝︎ To check the rates and terms you qualify for, SoFi conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.

TLS 1.2 Encrypted

Equal Housing Lender