Fed Raises Interest Rates to Highest Level in 22 Years
OAN’s Brooke Mallory
6:34 PM – Wednesday, July 26, 2023
The Federal Reserve Raises Interest Rates to 22-Year High
The Federal Reserve made a bold move on Wednesday, raising interest rates to a 22-year high. This decision comes after a brief pause in rate increases as the central bank tries to control unprecedented inflation.
The Federal Reserve has now raised its benchmark interest rate range from 0.25% to 5.25% and then again to 5.5%. This marks the 11th interest rate increase since March 2022.
All 11 voting members of the Federal Open Market Committee (FOMC), the panel of Fed officials responsible for monetary policy, supported the rate rise.
Interest rates are a powerful tool for combating excessive inflation, which has been causing financial strain for households over the past two years.
In June, inflation reached a 40-year high of 9.1%, raising concerns about a possible recession.
Recent consumer pricing statistics from the Department of Labor show that price growth has since slowed to 3% year after year. While this is an improvement, Federal Reserve officials are still cautious about reducing rate increases until inflation is closer to the bank’s 2% annual target.
In June, the Fed decided to pause rate hikes, but many members expressed support for raising rates last month. Additionally, the economy is growing at a slower pace and job creation has slowed since the Fed began raising interest rates.
Although a 0.25% increase may seem insignificant, incremental rate hikes can have a significant impact on the economy and the wallets of Americans.
Savings account rates are now comparable to the cost of carrying credit card debt, and higher interest rates make borrowing more expensive in an effort to control inflationary spending.
In June, a survey conducted by the National Association for Business Economics (NABE) showed that almost three-quarters of the 52 business economists polled predicted a recession within the next 12 months. This is a significant decrease from the 50-50 split in the April NABE survey.
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