Federal Reserve Set to Raise Interest Rates to 22-Year High Following June Pause

Leases & LoansMoney MattersInflation
Written By Jennifer Joslyn

The Federal Reserve is expected to raise interest rates by a quarter-percentage point, resuming its efforts to combat inflation after a brief pause in June. The rate hike would bring the federal funds rate to its highest level since 2001 and marks the 11th increase in nearly 18 months. The focus is also on Fed Chairman Jerome Powell's press conference, where investors look for clues about future rate hikes.

While many believe this will be the final increase in the tightening cycle, the resilient economy and tight labor market could pose challenges to controlling inflation. Core prices remain above the Fed's 2% target rate, indicating underlying price pressures. Some Fed officials support additional rate hikes depending on economic progress and inflation trends.

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Federal Reserve Set to Raise Interest Rates to 22-Year High Following June Pause
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The Federal Reserve raised the interest rates by a quarter point this week
The Federal Reserve raised the interest rates by a quarter point this week

What does this mean for you?

The Federal Reserve is likely to see rising employment costs as the go-ahead for another interest rate increase
The Federal Reserve is likely to see rising employment costs as the go-ahead for another interest rate increase

According to the U.S. Labor Department, the employment cost index grew by 1.2% from July through September.

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The Fed promises more rate hikes despite easing inflationary woes

Cozied up in Jackson Hole, Wyoming this week, Federal Reserve chair Jerome Powell shared a message with others at its Annual Economic Symposium: interest rates will continue to rise.

The Fed blames the supply chain for historic U.S. inflation
The Fed blames the supply chain for historic U.S. inflation

The Federal Reserve Bank of New York has compiled a data analysis that has placed much of the inflation blame squarely on the supply chain.

The Federal Reserve seems unsure about possibility of a recession
The Federal Reserve seems unsure about possibility of a recession

The strong economy benefits from raising wages and consumers continuing to spend. In a way, this inflationary period is testing the limits.

Main Street anticipating more Federal Reserve hikes
Main Street anticipating more Federal Reserve hikes

Higher interest rates mean consumers will pay more to borrow money from institutions.

Jennifer Joslyn
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