There’s a sense that we’re much closer to the end of this than to the beginning.Federal Reserve Chair Jerome Powell after the U.S. central bank announced a quarter-point increase in a key borrowing rate, bringing the rate to its highest level in 16 years.
What To Know: On Wednesday, the Federal Reserve raised the federal funds rate – a key borrowing rate – to [between] 5 percent to 5.25 percent. This marks the tenth time the nation's central bank has raised rates since March of 2022 as they attempt to cool the economy and combat elevated inflation (when your dollar buys you less). The federal funds rate impacts other borrowing rates, and can make it more expensive for both businesses and individuals to borrow money.
The Associated Press explains: "The Fed’s rate increases since March 2022 have more than doubled mortgage rates, elevated the costs of auto loans, credit card borrowing and business loans and heightened the risk of a recession." (Learn more here: Recession: What Is It and What Causes It)
Looking Ahead: Many economists say Federal Reserve officials may pause rate increases at their next meeting in June. On Wednesday, Powell said it will be "an ongoing assessment" as to whether future rate hikes are implemented; this "ongoing assessment" will be based on incoming economic data (such as what's happening in the labor market) as well as monitoring the recent banking turmoil in the U.S.
Fed raises key rate but hints it may pause amid bank turmoil (The Associated Press)
How a Fed increase could affect credit card debt, auto loans (The Associated Press)
Read our report on the latest inflation data for March 2023 HERE
by Jenna Lee,