The Federal Reserve raised interest rates for the 11th time in 16 months on Wednesday, as policymakers grapple with what more they need to do to snuff out inflation — and whether they might slow the economy too much.
Central bankers have been resolute in their fight to tame high prices, making clear they won’t let up prematurely. That has led the Fed to hike its benchmark policy rate more than 5 percentage points since March 2022, a historic pace designed tofor all kinds of goods and services, including mortgage rates, auto loans and business hiring. Borrowing costs are now at their highest level in 22 years.
The 0.25 percentage point hike Wednesday, which was widely expected at the conclusion of the Fed’s two-day policy meeting, brings the federal funds rate to between 5.25 and 5.5 percent.“Tighter credit conditions for households and businesses are likely to weigh on economic activity, hiring and inflation,” according to a Fed statement. “The extent of these effects remains uncertain. The committee remains highly attentive to inflation risks.
An interest rate hike will affect anyone with a home mortgage, car loan, savings account or money in the stock market. The choice will hinge on a range of factors that make the economy difficult to read in real time. Rate hikes work with a lag, and it’s unclear when the full scope of the Fed’s policies will hit. Experts
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