Wednesday’s top personal finance stories
By Heather Long
Janet L. Yellen, chair of the Federal Reserve, is stepping down as the central bank’s leader. (Andrew Harrer/Bloomberg)
The Federal Reserve voted unanimously Wednesday to keep interest rates unchanged at 1.25 to 1.5 percent. The move was widely expected as the Fed didn’t want to rile markets this week as Fed Chair Janet L. Yellen steps down and Jerome H. Powell, President Trump’s pick, takes over the reins of the central bank. Powell is set to be sworn in Monday at 9 a.m.
The change in leadership at the central bank is taking place at a time of strength for the U.S. and global economies, which should help ensure a smooth transition. In a statement, the Fed praised the “solid” gains in hiring, household spending and business investment. Unemployment is at a 17-year low, growth has picked up in recent months, and inflation has remained low. Perhaps the only concern is a stock market that keeps hitting record highs, but the Fed has said its main focus is the health of the wider economy, not daily market moves.
The Fed is strongly hinting that it is likely to hike interest rates at its next meeting in March. The committee that sets interest rates went out of its way to say that it expects inflation to hit — or at least come very close — to the Fed’s 2 percent target this year. Persistently low inflation has been the main stumbling block holding the Fed back from faster rate hikes.
“Inflation on a 12-month basis is expected to move up this year and to stabilize around the Committee’s 2 percent objective over the medium term,” the Fed wrote in its statement. There was no news conference after this meeting for the Fed to explain its thinking further.
The Fed projects three rate hikes this year.
It’s important to be realistic about spending and build contingencies around income.
Amazon, Berkshire Hathaway and J.P. Morgan will form a company to improve employee health care.
Turns out they weren’t a steal — they were a mistake.
Three major employers, Amazon, Berkshire Hathaway and JP Morgan Chase, announced Tuesday they were partnering to create an independent company aimed at reining in health-care costs.
There were almost no details available about how the company would function or how it would disrupt and simplify the complicated fabric of American health care. But there’s no doubt that the companies, which collectively employ more than 1 million workers worldwide, have a real interest in ratcheting down their spending on health care. Health care premiums are split between employers and employees and have been growing much faster than wages.
Major health company stock prices tumbled on the news, and the announcement stirred excitement — and questions — about how the three companies could bring their clout to containing costs in the massive employer-sponsored health insurance market, which provides coverage to approximately 160 million Americans.
“The U.S. health-care system is unsustainable in terms of its costs, and the entire debate by political leaders — whether it is Democrats or Republicans — has focused on repairing and replacing Obamacare and the ideological differences,” said John Sculley, who formerly led Apple and Pepsi-Cola and is now chief marketing officer of RxAdvance, a health tech company. “To have three of the most respected CEOs in the world step up and say that their companies are going to work together to focus on the real issues, of how do you make the U.S. health-care system sustainable and a better delivery of service than what we have today… it’s very positive.”
The announcement comes amid rampant rumors and anticipation that Amazon could disrupt health care as it has in other industries, particularly in the business of selling prescription drugs.
A person at one of the companies who is familiar with the …read more