U.S. News
Federal Reserve Hikes Interest Rates to 22-Year High
Clear Facts:
- The Federal Reserve has increased its baseline interest rate to a 22-year high in an ongoing battle against inflation.
- Despite inflation reducing to 3% year over year, Fed officials continue to cautiously uphold rate hikes until inflation approaches the bank’s 2% annual target.
- Despite initial fears of a recession, recent surveys and economic indicators reveal an increasingly optimistic outlook.
In an aggressive attempt to counteract historical inflation levels, the Federal Reserve has raised its benchmark interest rate range to 5.25 to 5.5 percent, a whopping 22-year high.
The unanimous decision made by all 11 voting members of the Federal Open Market Committee (FOMC), reflects the bank’s commitment to mitigate the impacts of inflation on the American economy.
Interest rates remain one of the most potent tools at the Federal Reserve’s disposal to mitigate inflation, which, although receding, has dealt a heavy blow to consumers over the past two years.
Inflation reached a disturbing 40-year high of 9.1 percent in June of last year, prompting concerns of an impending recession.
However, this figure has since dropped to 3 percent, according to consumer price data from the Department of Labor.
Despite this improvement, Fed officials remain cautious about scaling back on rate hikes until inflation nears the bank’s 2 percent annual target.
Although the increase of 0.25 percent may seem inconsequential, these steady rate hikes have a significant impact on the economy and the financial state of Americans.
Higher interest rates increase the cost of borrowing, thus curbing inflation-driving spending.
While some experts initially feared these hikes could push the economy into a recession, recent predictions are more optimistic.
A survey conducted by the National Association for Business Economics (NABE) revealed that nearly three-quarters of 52 business economists believe the likelihood of a recession within the next year is 50 percent or less.
In addition, consumer confidence surged to a two-year high in July, according to the business research group The Conference Board.
Political prisoner
July 30, 2023 at 8:38 am
“Core inflation strips out only food and energy prices, because they can be pretty volatile due to environmental issues or geopolitics.”
Well, if they leave out food and energy, of course, inflation is not as high as it had been. Gas is way up, again. Our grocery bill increases weekly despite my buying only the most needed items – no frills. Our insurance is sky high and rates just increased by the thousands. Repairs from Ian are exorbitant and insurance covers less than one would anticipate, but our governor is out campaigning for POTUS while we the people are getting no help from him or our insurance companies and this is among many insurance companies, not just one. The Fed is another joke on us. Sure raise the rates, make loans harder to come by. This government is out to destroy anything that will help the people unless they’re ILLEGAL INVADERS.
Leftshot
July 30, 2023 at 9:44 am
1. This inflation is primarily caused by government spending money they don’t have. They cover this shortfall by increasing the money supply. Basically, creating dollars with nothing behind it that devalues the dollar. As long as the federal government continues to do this the dollar will continue to lose value.
2. The secondary cause is driving up costs in energy and other products through government regulation. This drives up the price of almost all products, by increasing the cost of moving materials.
3. The feds ‘solution’ doesn’t address any of these core drivers. Rather it makes the basic problem worse. Bottom line is inflation means we can’t purchase the goods and services we previously bought. Our standard of living goes down. The Feds make this worse by making the cost of money higher. Higher interest rates drives up the cost of housing and discourages or makes more costly investment. The result is we are able to purchase even less.
All this is done at YOUR expense.
Finally, as we all know, the true level of inflation is hidden from us. What the government reports is less than half of what we see. Less than half of what the federal government used to report. They have changed the CPI calculation twice since 1980 so that it produces half the rate. Then they give us a year over year number making it appear so small. Inflation is just 3%. No, according to the government’s own calculations we are paying 20% more for the same goods and services we bought when Biden took office, and the real hike is closer to 40%!
Louis Cortez
July 30, 2023 at 10:48 am
Lets see. Inflation has dropped. But my grocery bill continues to climb. GAS doubled (or more) for a 100%+ increase but has dropped 15-25% so they call that drop from 9% inflation to 3%, a 66% drop not 25%. Insurance has just gone up 30-40%. I see no drop in overall cost of goods except lumber. Restaurants, clothing etc still high at the Covid rates. Our Government & officials tells us that we are at a so called 3% inflation now. Nothing to see here folks. Oh! OK! NOT!!! Play with the figures all you want. I dont see it or feel it (only a so callwd 3% inflation)
bill
July 30, 2023 at 10:52 am
It’s a game to them because the only ones that suffer after a rate hike is the consumer. Instead of cutting spending they increase the rate at which money can be borrowed but we the consumer can’t get loans, credit card debt costs even more prices for services, food and energy go up all because the geniuses in charge don’t know how to balance a checkbook. If people really opened their eyes, they would realize it always happens when the democrats take control of the house, 2007/2008 the collapse and 2019/2020 the pandemic which brought democrat presidents that made the economy worse. People always claim well look at what the republicans spent. Well duh, how do you think we bring the economy back after democrat disasters that they blame on the GOP the next election cycle? I am so tired of people being so naive because they can’t take the time to understand what really happened. Trump was elected, not Joe Biden but the democrats will do anything to control us even if it means using a puppet.