The US Federal Reserve is expected to raise interest rates again
DORAL, FL – The US Federal Reserve is expected to raise interest rates for the third time this year on Wednesday in an attempt to tackle the highest level of inflation experienced by the country in over 40 years.
Interest rates will go up to a range of 3.0% to 3.25% from the current level of 2.25% to 2.50% potentially holding the benchmark rate above 4% for an extended time as inflation continues to impact the economy.
According to the latest Consumer Price Index report, inflation is still elevated at 8.3% for the year ended in August which was higher than the market forecasts of 7.9% to 8.1%. In addition, the monthly reading from July to August showed that headline inflation crept up by 0.1%.
“We must keep at it until the job is done,” US Federal Reserve Chairman Jerome Powell said at an August central bankers’ forum in Jackson Hole, Wyoming. “While higher interest rates, slower growth, and softer labor market conditions will bring down inflation, they will also bring some pain to households and businesses. These are the unfortunate costs of reducing inflation. But a failure to restore price stability would mean far greater pain,” he warned.
So, what does the US Federal Reserve decision entails for consumers? The rate hikes mean that consumers are currently being charged the highest credit card rates since 1996, mortgage rates have topped 6%, and auto loans are the highest since 2012, noted Greg McBride, chief analyst at Bankrate, to CNN.
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