Interest rates Federal Reserve

2022 - 6 - 16

Who are the winners and losers of the Fed hiking interest rates? (NPR)

The Federal Reserve announced Wednesday it will increase its benchmark interest rate by 0.75%, the largest increase in decades. But what does that actually ...

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The Fed raised interest rates 0.75%: Here's how it will affect your ... (CBS News)

Federal Reserve's push to stem inflation could also make your credit card debt more expensive and impact home buyers.

That's better than savers used to earn, but it's still far below the rate of inflation. That is adding thousands to the annual cost of buying a property. But a bigger-than-expected interest rate increase on Wednesday "could be welcomed by stocks," Crisafulli said before the rate hike was announced. Further acceleration is expected" with additional hikes, said Ken Tumin of DepositAccounts.com in an email. Channel added: "These high rates have significantly dampened borrower desire to refinance current loans, and they're also showing signs of reducing demand for purchase mortgages as well." "And the 'terminal' funds rate (the level at which the Fed will stop hiking this cycle) is now seen north of 4%." Economists expect the Fed will continue to raise rates throughout the year as it battles inflation. With the latest rate increase, consumers and businesses should brace themselves for a hit to their wallet, experts say. So Wednesday's 0.75 percentage point increase means an extra $75 of interest for every $10,000 in debt. Consumers can also ask their credit card companies for a lower rate, which research has shown is frequently successful. Earlier this year, the Federal Reserve turned to its most potent weapon — raising interest rates — to combat soaring inflation. The rate hike follows the announcements of a 0.25 percentage point hike in March and a 0.5 percentage point move in May — with the latter marking the sharpest increase since 2000.

Fed raises interest rates by 0.75% - Santa Barbara News-Press (Santa Barbara News-Press)

(The Center Square) — The Federal Reserve announced a 0.75 percentage point rate hike Wednesday to help combat soaring inflation, the largest rate increase ...

The Federal Reserve’s complicity in financing Congress’ outrageous spending spree of the past two years is largely to blame for the sky-high inflation, the new housing bubble, and rampant speculation (in) the financial markets.” “The committee seeks to achieve maximum employment and inflation at the rate of 2% over the longer run,” the Federal Reserve said in a statement. Experts have acknowledged those issues but also point to a major spike in the U.S. money supply and federal debt spending.

Interest rates: What the Federal Reserve rate hike means for you ... (CNN)

New York (CNN Business) The Federal Reserve is stepping up its war on inflation. That means borrowing costs are going sharply higher for families and ...

Yet it will take time for the Fed's interest rate hikes to start chipping away at inflation. By the peak in July 1981, the effective Fed funds rate topped 22%. (Borrowing costs now won't be anywhere near those levels and there is little expectation that they will go up that sharply.) Before the Great Recession of 2007-2009, Fed rates got as high as 5.25%. Savers will start to earn interest again. And when credit markets froze in March 2020, the Fed rolled out emergency credit facilities to avoid a financial meltdown. Vaccines and massive spending from Congress paved the way for a rapid recovery. But the speed with which interest rates are expected to go up underscores its growing concern about the soaring cost of living. Rock-bottom rates have penalized savers. That means higher interest costs for mortgages, home equity lines of credit, credit cards, student debt and car loans. Business loans will also get pricier, for businesses large and small. When the pandemic erupted, the Fed made it almost free to borrow in a bid to encourage spending by households and businesses. The Fed's rescue worked.

Why are central banks pushing to raise interest rates? (The Guardian)

Banks are raising rates to bring down inflation but there is a risk to economic growth.

This is one of the reasons central banks say it can take time for higher rates to counter inflation. This means you won’t see higher costs until you come to the end of your term. Andrew Bailey, the Bank’s governor, has warned that Threadneedle Street must tread a “narrow path” between responding to high inflation and weaker growth. In addition, rising interest rates typically lead to a stronger currency on the foreign exchange markets. Those on standard variable rates – which track the Bank’s base rate – are the first to see the difference. While they’re typically slower to raise the interest paid on deposits, mortgage costs can rise quite quickly. Central banks also believe in the power of sending signals. Across the OECD group of wealthy nations, inflation has reached 9.2% – the highest since 1988. This can help to cool inflation when demand is outstripping supply. In the Eurozone, higher interest rates and the end of bond buying from the ECB has fuelled concerns over the fragmentation of the single currency bloc, reminiscent of the sovereign debt crisis in the middle of the last decade. When debt is costlier, this in turn can influence consumer demand for goods and services, as well as business investment and hiring intensions. Central banks around the world are pushing for the sharpest rise in interest rates in decades in response to soaring inflation.

What Americans face now as the Fed raises interest rates (bdnews24.com)

The US Federal Reserve's big interest rate hike on Wednesday -- and the expectation of more to come -- is aimed at bringing down 40-year high inflation ...

But Fed Chair Jerome Powell acknowledged on Wednesday that the task is getting harder. But investors are skeptical the Fed can achieve its aims without inducing a recession, often defined as two consecutive quarters of negative growth. That's one of the difficulties the Fed is facing. The surge has been driven by low borrowing costs, put in place by the Fed to cushion the economy from the COVID-19 pandemic, meeting an upswell in demand and an ongoing shortage of properties for sale. If you've got outstanding loans without fixed interest rates, the answer is a simple yes. A good read on that may require another several months of inflation and other data, says State Street's Marvin Loh.