The Fed announced that it’s raising interest rates by 50 basis points. It’s the first 50-basis point move since 2000. In a statement, officials said that economic activity “edged down in the first quarter” but noted that “household spending and business fixed investment remained strong.” Inflation “remains elevated,” CNBC reports. Economists say the central bank could be even more aggressive in the coming months, possibly raising rates by 75 basis points. In an article below, Fox News breaks down what these increases could mean for your mortgage, credit cards, and savings accounts.
Kitco News/Neils Christensen
The Fed is ready to raise rates by 50 bps, but what comes next?
The Federal Reserve is on the cusp of embarking on its most aggressive tightening cycle in 28 years. The central bank is all but guaranteed to raise interest rates by 50 basis points on Wednesday.
This will be the first 50-basis point move since 2000, but you have to go all the way back to 1994 to find a time when the U.S. central bank was this hawkish.
Still, the lingering question for markets and investors is just how hawkish the Federal Reserve will be.
Although markets see a nearly 100% chance of a 50-basis point move Wednesday, economists and market analysts note that there is still a lot of uncertainty surrounding the impending decision. There are some expectations that the Federal Reserve could surprise markets with a 75-basis point move.
Read the full story, here.
Fox Business/Breck Dumas
What do Federal Reserve interest rate hikes mean for Main Street?
The Federal Reserve is expected to announce a 50-basis point interest rate hike on Wednesday in what will be the second of several anticipated increases this year as the central bank seeks to combat soaring inflation, which is at a high not seen in four decades.
While the Fed’s actions are closely monitored by Wall Street, people on Main Street will be impacted, too, and should expect to pay more for car loans, mortgages, and credit card balances.
Continue reading, here.
We’re officially here. Growth is negative and inflation is at 9 percent. It’s 1974 all over again. In that year, all twelve months were spent in recession (one that lasted a year and a third) as prices rose at a double-digit rate. Out of obscure British usage, a term became idiomatic in America: stagflation.
It was not supposed to have happened. “As recently as 1970, the major U.S. econometric models implied that expansionary monetary and fiscal policies leading to a sustained inflation of about 4 percent per annum would lead also to sustained unemployment rates of less than 4 percent, or about a full percentage point lower than unemployment has averaged during any long period of U.S. history.” So wrote University of Chicago economist Robert E. Lucas beholding the problem at the time. His associate Thomas Sargent (both of whom now economics Nobelists) added, “as we all know, instead of 4-4, in the mid-1970s we got 9-9, a very improbable occurrence if the econometric models of 1969 had been correct.”
You can read the full story, here.