- On Wednesday, the Federal Reserve is preparing to raise interest rates for the sixth time this year.
- The increase will make borrowing money more expensive for consumers and businesses.
- The central bank is raising interest rates to curb inflation, which is hovering near a 40-year high. But higher rates risk sending the economy into recession.
The Federal Reserve is preparing to raise interest rates on Wednesday For the sixth time this year. This increase will have a direct impact on consumers’ wallets, making it more expensive for them to get a mortgage and pay off credit card debt.
The central bank is raising interest rates to curb inflation, which is hovering near a 40-year high. The September CPI report showed annual inflation fell slightly to 8.2% but rose 0.4% month over month, topping economists’ expectations.
The Fed is facing growing calls from lawmakers as well as at the United Nations to halt interest rate hikes over concerns it could spark a painful recession. But it did not indicate that it would hit the pause button anytime soon, as it aims to bring inflation closer to its 2% target, even if it causes job losses.
For now, at least, the job market is still going strong. Job opportunities are plentiful and unemployment is remarkably low. But economists don’t expect that to be the case in 2023, especially if the Fed continues to raise interest rates at a robust pace. If today’s rise comes as expected – 75 basis points – it would represent the fourth consecutive increase at this high level.
Stay tuned for our coverage of today’s crucial interest rate decision:
When is the Fed rate hike decision?
The Fed’s decision is announced at 2 p.m. ET on Wednesday.
– Elizabeth Buchwald
What time does Powell speak today?
Federal Reserve Chairman Jerome Powell’s media conference will begin at 2:30 p.m. ET on Wednesday. USA TODAY economics reporter Paul Davidson He will cover the event in person.
– Elizabeth Buchwald
What is the Federal Reserve System?
Before raising the interest rate, it’s time to reconsider what the Federal Reserve System is.
We often associate the Federal Reserve with Powell and the building in Washington, D.C., but the Federal Reserve extends far beyond that. There are 12 regional banks in Boston, New York, Philadelphia, Cleveland, Richmond, Atlanta, Chicago, St. Louis, Minneapolis, Kansas City, Dallas, and San Francisco. Each bank has its own boss.
There are 12 people responsible for deciding what to do with interest rates at every Federal Reserve meeting. Seven seats are filled by the Federal Reserve Board of Governors, which includes President Powell and six other people nominated by the president and confirmed by the Senate. The President of the Federal Reserve Bank of New York casts his vote on interest rates at every meeting. The remaining four votes come from a rotating group of leaders of other regional banks.
– Elizabeth Buchwald
What are the current mortgage rates?
Current mortgage rates have crossed 7% for the first time in more than two decades, leaving some Americans wondering if they want to buy a home in this The ever-changing housing market.
“No one expected it. We thought maybe a 5% max, but not a 7% interest rate,” Nadia EvangeloD., a senior economist and forecasting director for the National Association of Realtors, told USA TODAY. As a result, Evangelo said the Realtors Association has readjusted its forecast several times this year.
The current 30-year fixed-rate mortgage on Tuesday is 7.22%, down 8 basis points from last week, according to Bankrate.com. Bankrate said the current 15-year fixed-rate mortgage is 6.47%, up 3 basis points from last week.
The average adjustable rate mortgage is 5.53%, up 5 basis points from the same period last week. An adjustable mortgage is a home loan with an interest rate that can fluctuate over time.
– Terry Collins
Are we in a recession now?
While the two consecutive GDP contractions in the first two quarters of this year met an unofficial standard of stagnation, the National Bureau of Economic Research looks at a broader range of economic activity, including employment, retail sales and industrial production, before determining when the downturn begins and ends. NBER is a nonprofit, nonpartisan organization that frequently publishes economic research. Inside NBER is a team of eight economists tasked with determining when recessions will occur.
– Paul Davidson
How do you prepare for a recession?
Having said that, it is never too early to start thinking How to prepare for a recession.
Try to set aside just enough so you can rely on a very simple three-month budget in the event you lose your job, said Brian Robinson, financial advisor and partner with SharpePoint.
Also, consider deferring “good to have” purchases. For example, if your refrigerator breaks down, repair it or buy a new one. But if the hair dryer you’ve owned for five years still gets the job done, isn’t the quality of your newer hair dryer, keep it — and your money.
Make sure to take inventory of all your monthly subscriptions and ask yourself what you can live without, then cancel those subscriptions.
– Elizabeth Buchwald
Fed meeting schedule
The last meeting of the Federal Reserve of the year will be held from December 13 to 14. Then the central bank meets again on January 31 in its two-day meeting. Here is the schedule of meetings for the rest of 2023:
- From 21 to 22 March
- May 2-3
- From 13 to 14 June
- 25-26 July
- September 19-20
- October 31 – November 1
- December 12-13
– Elizabeth Buchwald
I interest rate bonds
– Jim Sergent
Today’s Fed Funds Rates
Before the upcoming Fed rate hike, the Fed funds rate ranges from 3% to 3.75%. A 75 basis point hike would push the range between 3.75% to 4%. The federal funds rate is the interest rate that banks charge to lend money to each other.
– Elizabeth Buchwald
How does raising interest rates help inflation?
Higher rates increase borrowing costs from consumers and businesses, reducing demand for products and services on a large scale, causing suppliers to lower or stop raising prices. but the The immediate effect varies greatly across individual goods and services.
Elizabeth Bushwald and Paul Davidson
stock market today
Stocks opened lower before the Fed’s decision. The Dow Jones Industrial Average was down 0.3% while the S&P 500 was down 0.7% and the Nasdaq was down 1.3% as of 12:30 PM ET.
– Elizabeth Buchwald
The performance of the S&P 500 over the past five price hikes
– Jim Sergent
The date of the Fed rate hike in 2022
Here’s when the Fed raised the short-term interest rate this year, and the amount by which it raised that rate.
- March 17: 0.25 percentage point
- May 5: 0.50 percentage point
- June 16: 0.75 percentage points
- July 28: 0.75 percentage points
- September 22: 0.75 percentage points
– Paul Davidson
What is inflation?:Understand why prices are rising, what causes it, and who hurts the most.
What is stagnation?:Explain the economic concept and what happens during one.
What does the Fed’s rate hike mean?
When the Fed raises interest rates, it becomes more expensive for banks to borrow money from each other. Banks pass these higher rates on to consumers by making it more expensive for them to get a mortgage, loan, pay off credit card debt, and more.
On the flip side, raising Fed rates increases the interest you earn on money in a savings account.
– Orlando Mallorkin
How will stocks react to the Fed?:Here’s how the stock market moves with all five Fed rate hikes
Bond prices:Why did I choose I Bonds to protect my children’s inheritance from hyperinflation for 40 years
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