Fed says inflation concerns remain, will continue raising rates

Minutes from the Federal Reserve’s September meeting showed that it expects to raise interest rates further. (one)

The Federal Reserve recently released minutes from its last September meeting, showing that Fed members intend to hike interest rates further in the coming months.

Although the Fed has recognized that it may need to slow the pace of rate hikes, minutes say it is likely to hike the federal funds rate further ahead of a pause.

“Several participants noted that, particularly in the current highly uncertain global economic and financial environment, it would be important to calibrate the pace of further monetary policy tightening to mitigate the risk of a material adverse impact on the economic outlook,” the Fed minutes said specified. “Participants noted that as monetary policy tightened further, at some point it would be appropriate to slow the pace of policy rate hikes while assessing the impact of cumulative policy adjustments on economic activity and inflation.

“Many participants pointed out that once the policy rate has reached a sufficiently restrictive level, it would probably be appropriate to maintain that level for some time pending convincing evidence that inflation is on track towards the 2% target. to return,” she continued.

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At its September meeting, the Federal Open Market Committee (FOMC) raised the federal funds rate by 75 basis points. This was the third straight hike of 75 basis points and the fifth rate hike this year.

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Fed fights 40 years of high inflation

If inflation rises, the Federal Reserve can bring it down again by raising interest rates to slow the economy. Although inflation has slowly eased over the past few months as the Fed has been raising interest rates, it still remains very high.

The consumer price index (CPI), a measure of inflation, rose 8.2% annually in September, slightly less than the 8.3% rise in August but still close to the 40-year high, according to the Bureau of Labor High of 9.1% in June Statistics (BLS).

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“The Fed is trying to get inflation under control, but you wouldn’t know that by looking at today’s CPI data,” said John Leer, chief economist at Morning Consult said in a tweet after the last inflation report. “While energy prices fall, accommodation and transportation services inflation is heating up, forcing consumers to make tough spending decisions until the end of the year.”

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What Fed rate hikes mean for your wallet

When the Federal Reserve raises the federal funds rate, it raises the rate at which banks borrow money overnight. These banks then pass the higher costs on to consumers by raising interest rates on their lending products.

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The central bank is expected to approve its fourth straight 75 basis point rate hike in November, which could push up interest rates on lending products such as personal loans, credit cards and mortgages. The CME FedWatch tool, which tracks trades, shows a more than 97% probability that the Fed will hike rates by 75 basis points in November.

If you want to take advantage of today’s interest rates before they go up, you might consider refinancing your personal student loans to potentially lower your interest rate and monthly payments. To find out if this is the right option for you, contact Credible to speak to a student loan expert and get all your questions answered.


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