Many economists believe that the Federal Reserve has gone too far in dropping interest rates all the way to 2.0% during 2008. Will the Fed hike interest rates and what will that mean for you?

What can you expect if the increase does happen?

*One of the main issues surrounding the Federal Reserve's decision is that by bringing interest rates down so much may be a significant part of why we are dealing with inflation and quickly rising gas prices in the first place. Bringing interest rates up may strengthen the dollar, therefore bringing the price of oil down (or at least slow the increase in price).

*Another issue is how the Fed's decision will affect the financial markets. The stock market has kept from falling off of a cliff this year because of the Federal Reserve's ability to cut interest rates. They cut the rates to stifle the possibility of a stock market collapse, and the market has done so-so throughout the year. The increase in interest rates in most cases cause a negative effect on the stock markets. That being said, don't be surprised if the market drops when the news comes out.

This time may be a little bit different; because market sentiment is so bad, and the stock market has been inversely correlated with the price of oil, an increase could actually have a positive impact on the financial markets. The thinking for investors and traders is that a stronger dollar and a fight against oil prices may mean a stronger economy for the U.S. in the near future. If the interest rates are raised, and it does help the dollar/ oil prices, then consumer and investor confidence can be restored.

An interest rate hike, although usually adversely affecting the stock market, may place investor confidence into the U.S. economy. Restoration of investor confidence could be the catalyst needed to get the stock market moving back in the right direction.

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