When it ends its latest policy meeting this afternoon, the Federal Reserve is expected to impose a second consecutive three-quarter-point hike in its benchmark interest rate, raising it to a range of 2.25% to 2.5%. It will be the Fed’s fourth rate hike since March. Since then, with inflation setting new four-decade highs, the central bank has tightened credit ever more aggressively.
Fed Chair Jerome Powell is set to hold a news conference later today and whatever signals, if any, he sends about the central bank’s next steps will draw intense interest.
By raising borrowing rates, the Fed makes it costlier to take out a mortgage or an auto or business loan. In turn, consumers and businesses will likely borrow and spend less, cooling the economy and slowing inflation. The Fed’s hikes have already led to a doubling of the average rate on a 30-year fixed mortgage in the past year, to 5.5%, and home sales have tumbled. The central bank is betting it can slow growth just enough to tame inflation yet not so much as to trigger a recession—a risk that many analysts fear may end badly. Read more.
