Teh One Who Knocks
09-21-2022, 06:30 PM
By Megan Henney | FOXBusiness
https://i.imgur.com/yWA9ufDl.jpeg
The Federal Reserve on Wednesday raised its benchmark interest rate by 75 basis points for the third straight month as it struggles to bring scorching-hot inflation under control, a move that threatens to slow U.S. economic growth and exacerbate financial pain for millions of households and businesses.
The three-quarter percentage point hikes in June, July and September – the most aggressive series of increases since 1994 – underscore just how serious Fed officials are about tackling the inflation crisis after a string of alarming economic reports. Policymakers voted unanimously to approve the latest super-sized hike.
The move puts the key benchmark federal funds rate at a range of 3% to 3.25%, the highest since the 2008 financial crisis. It marks the fifth consecutive rate increase this year.
In addition to the large rate hike, Fed officials laid out an aggressive path of rate increases for the remainder of the year. New economic projections released after the two-day meeting show policymakers expect interest rates to hit 4.4% by the end of the year. Officials expect to continue raising rates in 2023, before stopping at a termination rate of 4.6%, and modestly lowering rates beginning in 2024.
The rate hike decision and the latest economic projections underscore just how committed the Fed is to wrangling stubbornly high inflation under control, even if that means risking an economic recession.
Inflation ran even hotter than expected last month, with the consumer price index, a broad measure of the price for everyday goods that includes gasoline, groceries and rents, increasing 0.1% in August from the previous month, dashing hopes for a slowdown. On an annual basis, inflation is running at 8.3% — a nearly 40-year high.
But the efforts to combat inflation carry a potential risk of recession, with a growing number of economists and Wall Street firms forecasting an economic downturn this year or next. Hiking interest rates tends to create higher rates on consumer and business loans, which slows the economy by forcing employers to cut back on spending. Mortgage rates have nearly doubled from one year ago to 6%, while some credit card issuers have ratcheted up their rates to 20%.
Economists widely agree the risks of a recession climbed considerably this year and that avoiding a downturn in the near future will be increasingly difficult as the Fed tightens monetary policy.
https://i.imgur.com/yWA9ufDl.jpeg
The Federal Reserve on Wednesday raised its benchmark interest rate by 75 basis points for the third straight month as it struggles to bring scorching-hot inflation under control, a move that threatens to slow U.S. economic growth and exacerbate financial pain for millions of households and businesses.
The three-quarter percentage point hikes in June, July and September – the most aggressive series of increases since 1994 – underscore just how serious Fed officials are about tackling the inflation crisis after a string of alarming economic reports. Policymakers voted unanimously to approve the latest super-sized hike.
The move puts the key benchmark federal funds rate at a range of 3% to 3.25%, the highest since the 2008 financial crisis. It marks the fifth consecutive rate increase this year.
In addition to the large rate hike, Fed officials laid out an aggressive path of rate increases for the remainder of the year. New economic projections released after the two-day meeting show policymakers expect interest rates to hit 4.4% by the end of the year. Officials expect to continue raising rates in 2023, before stopping at a termination rate of 4.6%, and modestly lowering rates beginning in 2024.
The rate hike decision and the latest economic projections underscore just how committed the Fed is to wrangling stubbornly high inflation under control, even if that means risking an economic recession.
Inflation ran even hotter than expected last month, with the consumer price index, a broad measure of the price for everyday goods that includes gasoline, groceries and rents, increasing 0.1% in August from the previous month, dashing hopes for a slowdown. On an annual basis, inflation is running at 8.3% — a nearly 40-year high.
But the efforts to combat inflation carry a potential risk of recession, with a growing number of economists and Wall Street firms forecasting an economic downturn this year or next. Hiking interest rates tends to create higher rates on consumer and business loans, which slows the economy by forcing employers to cut back on spending. Mortgage rates have nearly doubled from one year ago to 6%, while some credit card issuers have ratcheted up their rates to 20%.
Economists widely agree the risks of a recession climbed considerably this year and that avoiding a downturn in the near future will be increasingly difficult as the Fed tightens monetary policy.