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Fed alters approach to inflation; NJ considers 'baby bonds': What today's news means for your money

Federal Reserve Chairman Jerome Powell announced a changed Fed approach to inflation; a new map shows homes in danger of flooding; and NJ introduces the idea of a "baby bond."

Federal Reserve Chairman Jerome Powell speaks to reporters after the Federal Reserve cut interest rates in an emergency move designed to shield the world's largest economy from the impact of the coronavirus, during a news conference in Washington, March 3, 2020.
Kevin Lamarque | Reuters

The Fed's pushing up inflation; a new map shows which homes may be in more danger of flooding; and New Jersey is weighing the idea of giving qualifying families "baby bonds." Here's how the headlines could affect your money.

Fed announces approach to inflation that may keep rates low

Federal Reserve Chairman Jerome Powell announced a policy shift on Thursday at a virtual version of the Fed's annual conference that could help keep interest rates low: He said the Fed would allow inflation to run higher than usual "for some time." Typically, the Fed aims to keep inflation at about 2%. 

He also emphasized the importance of a strong labor market and a focus on employment opportunities for middle- and low-income communities.

Afterward, the Dow jumped 250 points and officially erased its 2020 losses.

A new map shows homes with future flood risks

Hurricane Laura pounded the Gulf Coast on Thursday with 150 mph winds, torrential rains, and rising seawater. More than 580,000 local residents had been ordered to evacuate. 

Until recently, federal flood maps, which provide flood and risk data in given areas, were backward-looking and did not figure in the effects of climate change. A nonprofit tech group called First Street Foundation launched an interactive, forward-looking website this week offering flood risk data on millions of homes across the U.S.

Realtor.com will include its data on its listings, giving homebuyers a chance to weigh these risks as they decide whether or not to purchase a property.

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New Jersey proposes a 'baby bond'

Children born to families earning less than about $131,000 per year could get a $1,000 "baby bond" under a new proposal by New Jersey Governor Philip D. Murphy aimed at narrowing the wealth gap. At maturity, the bonds could be worth about $1,270, and the money could be used for qualifying expenses such as college tuition or buying a home. 

The bond is a good example of the tremendous impact you can have if you invest for your kids starting when they're little and let compound interest do the work for you. Check out Grow's compound interest calculator to learn more about how time can help you grow your money.

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Words you've heard: Inflation

The inflation rate is a measure of the change in prices, which typically increase. When it comes to your personal finances, inflation can affect everything from how much you pay to how much you earn. It can also cut into the value of your savings and give you more incentive to keep investing for long-term goals. 

Although the daily news can have an impact on your wallet, remember to take a long-term outlook when it comes to decisions on spending, saving, and investing.

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