The Federal Reserve's decisive statement this week that interest rates are unlikely to rise this year sends a signal to U.S. households: keep buying stuff, Reuters reported. A solid majority of Fed policymakers on Wednesday said higher rates are unlikely this year, leading investors to bet that the economy might slowing enough for the Fed to actually cut rates. The Fed's signal on its interest rate outlook led key market rates to fall, including the yield on 10-year Treasury bonds. That is a sign that rates are also falling for loans used to buy houses and cars. Interest rates for credit cards may also drift lower. Mortgage rates have been falling since November when Fed policymakers made clear they would be patient about rate decisions. Lower rates also encourage spending by taking the shine off some common ways to save money. Low yields reduce the return on money in savings accounts as well as in funds made up of safe-haven government bonds. This poses a problem for retirees who depend more on their income from savings and who take a hit from lower rates on Treasury bonds. The Fed has argued that retirees benefit from actions taken to support the broader economy.
