The Federal Reserve on Wednesday raised interest rates by a quarter of a point in a bid to control inflation and cool the economy, and a decision that will affect anyone who borrows or saves money.
The rates on home lines of credit, credit cards, car loans, savings accounts, and deposit certificates are affected by the Federal Reserve’s movements in interest rates, and may go up.
Lenders with home mortgages with fixed rate loans will not be affected because their rates are set regardless of what the Fed does.
But many other consumers are suffering from higher borrowing costs, and now it’s just starting to increase.
Rates have already begun to rise in financial institutions, according to Dan Geller, an economist at San Francisco-based Analyticom, a behavioral economist and an economist at a financial company.
“All interest rates on mortgages, mortgages, home equity lines of credit, mortgages, credit cards, personal loans, the full spectrum of loans will need to rise,” Geller said.
With the decision taken on Wednesday, the Central Bank has officially embarked on a strategy to reduce inflation, while avoiding a slowdown in business and consumer activity as the economy collapses.
“We are well aware that our decisions affect consumers, families and businesses across the country,” said Fed Chairman Jerome Powell in comments to discuss the rate hike.
The Faith leader stressed that the national economy could suffer from the impact of rising interest rates, which tend to reduce economic activity.
“The economy is very strong, there is tremendous growth in the labor market and we expect it to continue to gain momentum,” Powell said.
Powell believes that Federal Reserve decision-makers have little choice but to raise rates.
“It’s clear it’s time to raise interest rates,” Powell said.
Ominously, the president of the Fed warned that loans could expect further interest rate hikes.
“We will take steps to prevent inflation from taking root while maintaining a strong labor market,” Powell said.
Inflation has risen at an annual rate of 5.2% in the Bay Area, the highest in two counties in two counties, and 7.9% in the United States, the highest in the four decades for the nation.
The current wild level of consumer prices is a reminder of how far the Fed has to go to continue its quest to stifle inflation.
“Our goal is to bring inflation down to 2%,” Powell said.
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Bay Area faces widespread effects – Times-Herald Source link Bay Area faces widespread effects – Times-Herald