What's going on?

As expected by 94% of investors, the US Federal Reserve (a.k.a. the Fed) announced another interest rate hike on Wednesday.

What does this mean?

The US economy�s been strong by most accounts � and manufacturing data released on Tuesday suggests it�s continuing to lift heavy. Left unchecked, it�d likely lead to higher inflation (where prices of goods and services rise, thanks to increased demand for them). Higher interest rates help cool this growth by making it a little more rewarding to save money (think: interest from the bank) and more expensive to borrow money and spend (think: higher interest payments).

Why should I care?

For markets: The world�s taking note of the US.

When US interest rates move, the world notices � probably because investors choose to move their cash around in response. The latest hike effectively means investors can get paid more than before, from owning new US government bonds � which are essentially risk-free, since the US can choose to print more money to pay back its debts if need be. To some investors, this is a more attractive prospect than buying the bonds of potentially risky emerging markets like Argentina � or shaky developed markets like Italy. And the divergence between the US and some other countries may get bigger: the Fed�s expecting to increase interest rates even further between now and 2020.

For you, personally: Rising rates are bittersweet for homeowners.

If you�re in the US, along with the rise you�ll probably get in interest on your savings, the cost of new loans and variable rate mortgages will increase, too. A risk to homeowners is mortgage payments rising faster than they can keep up with � perhaps forcing them to sell, or risk default. In August, new home buying in the US exceeded expectations, perhaps as would-be homeowners tried to lock in more favorable fixed mortgage rates (which don�t move with interest rate changes).