Yesterday, The Federal Reserve announced an interest rate hike of 0.50% as part of an effort to tamp down the inflationary pressures weighing on Americans.
The decision was unanimous, with all 12 members of the policy-setting committee agreeing on it, and it marked the most aggressive increase made in a single Federal Reserve meeting since May 2000. Over the last two decades, the Fed has raised interest rates only in increments of 0.25%.
In a post-meeting press conference, Fed Chairman Jerome Powell said that additional half-percentage-point rate hikes will be on the table for the next few meetings, but the bank isn’t looking to go bigger than that.
Rate hikes bleed through the economy in many ways: in the form of higher interest rates on credit products like credit cards, mortgages and business loans. As the Fed raises interest rates, it’s expected that will gradually slow down consumer demand and decrease pressure on prices. But, because Americans are struggling with rising costs everywhere — from the grocery store to gas pumps — some wonder if the central banks is behind the curve with its policy.
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