Federal Reserve Announces DRASTIC New Measures
(TargetLiberty.org) – After fighting a pandemic and dealing with long-term shutdowns across the globe, the economic situation in America isn’t great. While unemployment is low in the US, inflation is very high. That means although people are working, they’re struggling to pay for just about everything.
The Federal Reserve is desperately trying to curb the inflation crisis by raising rates. However, it’s creating an entirely different problem.
Fed Raises Rates … Again
On Wednesday, July 27, the Federal Reserve increased the benchmark interest rate by 0.75 percentage points. After sitting at 0% during the height of the pandemic, it’s now in the range of 2.25% to 2.5%.
The interest rate hike by the Fed primarily impacts what the banks charge when they loan to one another, but it does have a wide-reaching impact on the overall economy, as well. When the rates were lowered to 0%, it was done to increase economic activity to avoid a recession during the pandemic. Americans were out of work, factories shut down, and there was concern the economic stability in the country would collapse. As the country moved out of the pandemic, inflation started to rise.
In July, the Labor Department released data showing the new inflation rate was an astronomical 9.1%. That caused the central bank to hike up rates to try to slow the economy to reduce prices. But it has created new problems.
Impact of Rate Increase
The increased interest rates do have some impact on the American people, but there are ways to minimize it. If someone is in the market to purchase a home, the buyer might have to shop around for the best deal from a bank. It’s very important to ensure the mortgage has a fixed rate, and not an adjustable one.
The Fed’s increases will cause adjustable rate mortgages to rise, too, making the payment more expensive each month.
In addition to mortgages, credit card debt will increase, meaning it will take longer for people who are just sending in minimum payments to reduce or eliminate their balances. Those who hold this type of debt should put more money towards it if at all possible to pay it down quickly.
Auto loans will also get more expensive. The Fed plans to increase rates more, so if someone is in the market for a new vehicle, now might be the time to pull the trigger on a purchase.
Have the interest rate hikes negatively impacted your family? If so, tell us your story.
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