Fed Chair Raises Interest Rates 0.25%
Your interest rates for credit cards, new cars, private student loans and even some mortgages are likely going up starting today. The federal reserve met on Wednesday and Thursday of this week and in this meeting they raised interest rates for the first time since 2018.
Since the start of the pandemic you know rates have been at near 0 but the fed is raising it a quarter of a percent (0.025%).
Generally the fed wants to keep inflation hovering around 2% but you know inflation is at a 40 year high the current inflation rate is 7.9%.
The fed has one huge tool to regulate the economy and that tool is interest rates. When the economy is sluggish they lower it like they did during the pandemic.
Then when the economy is too hot they raise it. When raising it the Fed makes borrowing money more expensive for consumers and businesses so they hold off on making investments which in turn cools off demand and holds down prices.
The secondary effect it can also have is if prices go down it elevates the strain on the supply chain.
There is a lag time between the interest rate hikes and your loan and for a time unfortunately we may see high prices, high interests, and high inflation.
The vote on raising interest rates was 8–1 the one person that voted in opposing wanted to raise it more. The fed chair agreed to raise interest rates 6 more times this year and 4 more times next year.
Eventually inflation and the prices will start to come down. There is the aitive in this if you have a savings account this rate hike might be helpful to all that money in the savings.