18.06.14 Fed Moves

June 14, 2018
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How Hot is TOO Hot?

A fired-up U.S. economy does have a downside…

Why the Federal Reserve is taking action to cool things off.


“Main takeaway is the economy is doing very well.”A

Federal Reserve Chair Jay Powell

  • What:A Federal Reserve (U.S. Central Bank) hiked a key short-term interest rate Wednesday.
  • Why it matters: Borrowing gets more expensive – rate impacts credit cards, mortgages, auto loans, etc. But savers to benefit.

What’s to Blame

  • Inflation = increase in prices, drop in purchasingA value of money (i.e. thingsA cost more).
  • Fed’s goal: keep economy expanding, but not so fast that it drives up inflation.
  • A decade after the recession, Fed has made progress. May unemployment rate was 3.8%, lowest since 2000, while inflation was just below Fed’s 2% target.

The Fed began raising rates from 0 at the end of 2015 with the goal to bring it to 3% in next few years. We're halfway there with 2 more increases expected this year. Click for one opinion on why the Fed should just let inflation rise.

by Jenna Lee,