It wasn’t a surprise, with hints coming for weeks, but the Federal Reserve raised its benchmark interest rate by 75 points. It’s the second month in a row they’ve done it, with the intent of trying to minimize the inflation act is out of control in the U.S. that is tightening the financial screws on most Americans.
In June and July, the Fed raised rates three-quarter percentage points, which was their first such move since 1994. This move puts the key benchmark federal funds rate at a range between 2.25% to 2.50%.
In June, inflation shot to 9.1%, and these efforts by the Fed to combat inflation have a potential downside; a full-blown recession. This rise in interest rates means mortgage rates will continue to be out of control, doubling from a year ago, and if you check your credit card statement, you’ll see some cards have raised their rates to 20%.
Here’s a quote from Fed Chairman Jerome Powell.
“We think it’s necessary to have growth slow down. We actually think we need a period of growth below potential in order to create some slack so that the supply side can catch up.”
Powell was asked specifically if he thinks the U.S. economy is in a recession right now.
“It doesn’t make sense that the economy would be in a recession. So, I don’t think the U.S. economy is in a recession right now.”