Market Round Up: Fed ups rates 😣 – Save me Marcus 🏦
1. Fed up with interest rates
The U.S. Federal Reserve raised short term interest rates by a quarter percent to 2.25%. And President Trump is not happy.
Renewing his criticism of the central bank, Trump said that he disapproved of the Fed’s rate hike and argued that savings from lower rates could help improve the country’s finances, help create jobs and pay off the national debt. This is now the Fed’s third rate hike in 2018, and doesn’t come as a surprise as it had been signalling such an event for several months.
With rates closely tied to consumer debt such as credit cards and mortgages, the cumulative effect is going to place a strain on many households – especially for those with variable rate mortgages and tight budgets. But from the perspective of the ‘Big Picture’, it’s generally considered an indication that the economy is doing well, and paves the way for pay raises and a better return on savings. So, you win some, you lose some!
2. Save me Marcus
Once considered master of the financial galaxy, investment bank Goldman Sachs announced it will be offering savings accounts to members of the UK public.
Called Marcus after the founder, Marcus Goldman, it will be hoping to disrupt the market by offering the best interest rate of any bank or building society. But how long will that hold? Interest rate tables are notoriously full of special discounts and most expect that after an initial introductory period, Marcus accounts will have to be adjusted to be closer in line with others. On the other hand, in the short term, it could worry other banks enough to offer better rates too.
It will be interesting to see if Marcus is able to knock the general malaise in savings accounts transfers. High street banks have been using this malaise to offer them much lower rates than they can get elsewhere because of the feeling that there is not much to be gained by switching.
Marcus has been available in America since 2016 and, if it proves successful in the UK, will be rolled out to the rest of Europe.
Related: Meet Marcus & UK Exodus