June 18, 2022

Here’s What the Fed’s Rate Hike Means For You

The Federal Reserve raised interest rates by a staggering 0.75% this week — the largest increase since 1994.

Here are 5 ways the rate hike will affect Americans, according to The Hill:

#1 Monthly car, mortgage, and credit card payments will increase
The Hill noted that the Fed’s rate hike “translates down to higher rates in credit markets, mortgage markets and any industry that relies on financing plans to make payments.”

#2 Volatile stock markets
Since the Fed started hiking its interest rates in March, the Dow fell 12 percent, the S&P fell 16 percent, and the Nasdaq dropped 20 percent.

#3 It’ll be harder to find a job
“Price increases that shrink demand also have the effect of forcing companies to cut costs, and one of the first places they look to do that is in the labor force,” the outlet reported.

#4 A recession is becoming more likely
“I’m not as worried about a return to the inflation levels of the 1970s as I am about a deep recession that is going to bring inflation way down soon,” said Desmond Lachman, an economist at the American Enterprise Institute (AEI).

#5 The national deficit will be a bigger drag on taxpayers
“The government is going to have to pay out more in interest payments,” Lachman said. “On top of that, what’s going to happen in the progress that we’ve been making in reducing the deficit is also going to go, because as the economy tanks and goes into recession, it means the government’s going to collect fewer taxes.”  

“The wrong thing for the Fed to do was — especially after the Biden package of $1.9 trillion, 8 percent of GDP, the kind of fiscal stimulus that we’ve never had before during peacetime — the Fed just sat with interest rates at zero and then kept convincing itself that inflation was transitory and had nothing to do with the fact that the money supply had increased by 40 percent over two years. That was insane.”  

One comment on “Here’s What the Fed’s Rate Hike Means For You

  1. Donna Caron says:

    Just another case of the rich getting richer and the poor getting poorer! Corporations and politicians are recording record profits while the rest of us are becoming hungry, poverty stricken and homeless! That’s our government for you!

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