• 1440 Daily Digest

Another rate hike from the Fed

The Federal Reserve has approved its third consecutive 0.75% increase in interest rates, raising the benchmark federal-funds rate to a range of 3.0%-3.25%, the highest level since 2008 (see history). The central bank has now increased rates five times since the year began in an effort to cool the economy and quell 40-year-high inflation.

Policymakers also released economic forecasts, with plans to raise interest rates to 4.4% by the end of 2022 and up to 4.6% in 2023. Rate cuts aren't expected until 2024. As a result, unemployment is estimated to rise to 4.4% next year from its current 3.7%. Gross domestic product growth is predicted to slow to 0.2% for 2022 before rising to 1.2% in 2023.

The rate hikes mean higher borrowing costs for consumers and businesses, including for credit cards, mortgages, and auto loans. Costlier borrowing could prompt consumers to hold off on spending, thus bringing down prices

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