WASHINGTON, D.C. – The Federal Reserve, in its continuing efforts to combat inflation rates in the country that have been hovering at 40-year high levels, raised interest rates on Wednesday by 75 base points – the fourth time they raised rates so far in 2022 – with additional raises expected before the end of the year.
Previously, the Fed had raised interest rates by 75 basis points in June – the largest increase in almost 30 years – in addition to a 50 basis points in May and 25 basis points in March.
According to a statement released by the Fed on the occasion of this latest rate hike, the reasoning behind it was to help sustain growth the country has been experiencing lately and to make sure the economy doesn’t backtrack.
“Recent indicators of spending and production have softened,” the statement said. “Nonetheless, job gains have been robust in recent months, and the unemployment rate has remained low. Inflation remains elevated, reflecting supply and demand imbalances related to the pandemic, higher food and energy prices, and broader price pressures.”
However, with this latest rate increase, interest rates on a variety of personal and home loans – already spiking to high levels due to previous Fed increases – are expected to climb even further, according to TransUnion Vice President of U.S. Research and Consulting Michele Raneri.
“Interest rates on new fixed-rate mortgages, which are a majority of mortgages, often increase after a Fed interest rate increase, which will make buying new homes or refinancing more expensive,” she said.
Wednesday’s Fed rate hike is anticipated to have additional negative economic impacts upon the wallets of Americans as well. For example, credit card interest rates are expected to rise, which could have a significant impact upon individuals with high balances.
In order to keep up, experts encourage people to increase their monthly minimum payments, or consolidate their credit card balances onto a single lower-interest card or obtain a personal loan before rates go up further.
And as the Fed continues to raise rates to combat inflation – even as the country teeters on the brink of a recession – Americans, already weary by daily economic turmoil, can expect further corresponding increases in loan and credit interest rates along the way as well.