Interest rates spark interest

The newspaper stories Wednesday morning had forecast it. The news announcement Wednesday afternoon verified it. The Federal Reserve hiked a short-term interest rate for the first time in four years, and reporters are racing the clock to render the news in a way that relates to readers.

Forget business sections, this is a headline that will sprint across most front pages. Reporters see this as a threshold-crossing moment when the Fed begins scooping the lowest interest rates in 46 years back up to normal levels, affecting everything from car loans to credit card rates.

"Right now, the Fed is at a pivotal point," said Nell Henderson, an economics reporter at The Washington Post.

For Henderson, who covers the Fed, this was a chaotic point. Immediately after the Fed announced at 2:15 p.m. that it would boost the federal funds interest rate from its yearlong hiatus at 1 percent up to 1.25 percent, she had to write the breaking story for the paper's Web site, then appear for an MSNBC television interview, then come back and write the print story for the next day's edition.

But in speculating the news, newspaper stories on Wednesday morning had already analyzed many effects that a rise in the short-term interest rate -- which the Fed uses to balance a growing economy with low inflation -- would likely have.

It will help retirement savers, but hinder heavy borrowers or new homebuyers, wrote reporter George Avalos, of The Contra Costa Times. Beyond yesterday's announcement, it raises the question of future hikes -- which the Fed promised would be "measured" -- reported Urvaksh Karkaria, a business writer for The (Fort Wayne) Journal Gazette.

Henderson's story in Wednesday's Washington Post foretold that the Fed will still pace their rate increases warily enough that "it won't mean the days of easy money are over." She wrote that, at 1.25 percent, the rate still remains at historically bottom-floor levels.

Keeping that balanced perspective is important for a story this complex, she said. While this rate hike won't overturn the economy, it marks a gradual change that will ultimately mold future commercial interest rates -- and that, she said, is how to bring an otherwise obscure decision into people's living rooms.

"It's hard not to sound geeky, especially when you talk to people who talk in arcane jargon," she said. "No person gets the federal funds rate. But if I say this affects mortgage rates, or that inflation affects consumer prices, people relate to that very directly."

As a sidebar to his main interest-rate story in Wednesday's paper, Arizona Republic reporter Russ Wiles turned to real people to tell his story. On Monday, knowing the Fed could hand down a decision on Wednesday, he stood outside a local bank branch with a photographer and asked passers-by whether an interest rate change might sway them from a new home or old investment.

The result: Four personal stories and real faces of the impact of the rate hike, from a 61-year-old retiree who plans to open new CDs to a 25-year-old first-time homebuyer who hopes higher rates will actually trim home prices.

"It's not always easy," said Wiles, a personal finance reporter for the paper. "People talking on the street don't feel comfortable talking about economic topics. It takes a little bit of probing."

But, he said, he started on that "real-people" angle before even embarking on the explanatory mainbar.

"The economics is easy," he said. "The tough thing is finding the real people on a moment's notice to liven it up a bit."

It's no surprise that real people were in demand by reporters cranking out Wednesday morning's stories on the possible effects of a rising rate. But interestingly, those possible effects differed quite a bit.

Some stories argued that this first hike would leave a financial bruise. Others countered that it would hardly leave a mark -- as evident in the story's own headlines: "Rate hike won't smart," promised a Tallahassee Democrat story, while a piece from The Detroit News warned "Rate hike to sting consumers."

But even for those who make understanding the Fed a full-time job, it's tough to understand the Fed. After all, these are people attempting to govern a most unmanageable aspect of life: the economy.

"These are some of the biggest brains in the world," Henderson said, "and even they get surprised" by economic turns of events. She suggests keeping that in perspective and making stories more explanatory then predictive to keep stories in line.

"It's hard to get right because the economy is so complex," she said. "Reporters, as well as the Fed, are trying to make sense of this."