Fed Imposes Historic Interest Rate Increase

Fed Imposes Historic Interest Rate Increase

After 2 DECADES – Feds Are Finally Dropping The Hammer!

(ConservativeHub.com) – COVID-19 began a strange set of circumstances worldwide, leading to intense unemployment at times and unprecedented government stimulus checks like citizens had never seen. Eventually, life started to return toward normality as people reentered the workforce and unmasked themselves in grocery stores.

Yet, all the money people saved over the past two years is now chasing goods suddenly in short supply, hampered by supply chain distributions, causing inflation to skyrocket. In light of this, the Fed has now announced the biggest interest rate hike in over 20 years.

Why the Fed Is Bumping Interest Rates

The Fed’s interest rate increase affects auto loans, credit cards, savings accounts, and even mortgages. The government agency kept the rate down at almost 0 after COVID-19 hit to stimulate the economy. However, it raised rates this March as inflation hit 8.5%. The Fed raises rates to slow down borrowing, cool off consumer demand, and relieve the pressures currently pushing prices upwards.

However, on Wednesday, May 4, the Federal Reserve announced it would raise its rates again, this time by a full half a percentage point. They hope this step will curtail inflation without sending the economy into a recession. It’s important to remember this rate hike doesn’t affect federal student loans or existing fixed-rate loans, even though new car loans and home equity lines will be increasing in price.

MSNBC shared more information on what this rate hike means for Americans:

Can the US Beat Inflation?

As the Federal Reserve cools off the economy by increasing the amount it costs to borrow money, it will hopefully bring the historically high inflation under control. Still, the hope is to accomplish inflation control without seeing layoffs and while encouraging people to save. The Fed has the unenviable task of walking a tightrope between controlling inflation and setting off a recession. So, in the coming months, the Fed could continue to raise rates steadily, but can they do it without scaring Americans and their businesses into hoarding their savings?

Citizens across the nation are feeling the effects of high gas and food prices and realizing this inflation may not be “transitory” as the government had previously stated. While it seems there isn’t one specific factor causing this economic turmoil, its effect has been noticeable across the nation. Will this prompt Americans to go to the polls soon to vote for candidates who will support a more free-market economy and lower restrictions that might keep a recession at bay?

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