• 1440 Daily Digest

Rates Rise Again

The Federal Reserve yesterday approved its fourth consecutive 0.75% increase in interest rates in an effort to curb 40-year high inflation. It is the sixth overall rate hike this year and part of the Fed's most aggressive initiative since 1980. The increase brings up the Fed's benchmark federal funds rate from near zero in March to a range of 3.75%-4%, the highest in 15 years. The rate sets what banks charge each other for overnight loans and affects borrowing costs for consumers, including for mortgages, auto loans, and credit cards (see 101). The Fed plans to continue to raise interest rates to return inflation to its 2% target (see why), though the pace of the increases could slow down as soon as next month. In contrast, the latest government data showed annual inflation hit 8.2% in September. The Fed also said it will consider the lag between the rapid hikes and their effects on the economy.

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