Federal Reserve hikes interest rates by 75 basis points for fourth time this year
- The Federal Reserve raised interest rates for the sixth time this year, citing persistent inflation.
- Its also the fourth consecutive 0.75 percentage point increase, which means financing costs will jump for many types of consumer loans.
- Here’s how your mortgage, credit card, car loan, student debt and savings could be impacted.
The Federal Reserve on Wednesday hiked interest rates by three-quarters of a percentage point, pressing even harder on the brakes of the economy in a scramble to slow inflation.
The Federal Open Market Committee (FOMC), the panel of Fed officials responsible for monetary policy, boosted the central bank’s baseline interest rate range to a span of 3.75 to 4 percent. It is the fourth consecutive 75 basis point hike issued by the Fed and sixth interest rate increase since March.
The Fed has faced growing pressure from some policymakers, especially Democratic lawmakers, to slow down its rate hike campaign amid growing signs of a looming recession.
Critics of the Fed’s approach argue the bank will needlessly drive millions into unemployment by ignoring clear signs of inflation falling, the lagging effect of Fed interest rate hikes and the bank’s inability to solve supply snarls.
Fed leaders, however, have insisted for months that they will continue to boost interest rates until inflation shows signs of falling toward the bank’s annual 2 percent target.
What the federal funds rate means to you
The federal funds rate, which is set by the central bank, is the interest rate at which banks borrow and lend to one another overnight. Although that’s not the rate consumers pay, the Fed’s moves still affect the borrowing and saving rates they see every day.
By raising rates, the Fed makes it costlier to take out a loan, causing people to borrow and spend less, effectively pumping the brakes on the economy and slowing down the pace of price increases.
