GREEN BAY – The stock market bounced back Thursday after big losses the day before.
Investors were reacting to comments made by the new head of the Federal Reserve.
The question is, will any of this have an impact on your financial future?
Janet Yellen sent financial markets into a temporary tailspin with her public debut as federal chair.
“Something on the order of around six months, that type of thing,” said Yellen.
Around six months. That was Yellen’s response to a question about how long the fed would wait to raise interest rates, after ending its stimulus. The time frame was earlier than expected.
“That’s not out of line with what they’ve kind of been indicating before, but some people viewed that as tightening is on the horizon,” said Ken Petter, Robert W. Baird financial adviser.
But what a difference a day can make. On Thursday, the stock market erased Wednesday’s losses.
Financial experts say while in the near term markets will fluctuate, investors should consider Yellen’s comments good news for the long term.
“Long term investors, or people invested in 401Ks, should continue to keep their long-term plan. And the news yesterday isn’t anything that would cause you to change,” Petter said.
Petter says higher interest rates will help people who save, but make it more expensive to borrow. However, he adds rates are still historically very low.
“And it’s a balance. If interest rates are a little higher, but people are confident, they may invest you know businesses may invest and grow,” Petter said.
Some financial experts have another view. They say the economy isn’t ready for higher interest rates.
“I think one of the most negative aspects of today’s Fed meeting was that the Fed increased the timing or the amount of rate hikes that we’re going to see and pushed them forward,” said LPL Financial Senior VP Anthony Valeri.
If the stimulus program does wrap up by the end of the year, as economists expect, then interest rates could rise during the first half of 2015.
Yellen also said Wednesday the Fed is backing off tying interest rates to falling unemployment. The nation’s rate is sitting at 6.7 percent.