The Federal Reserve (FED) announced that it will increase, for the sixth time so far this year, interest rates as part of the strategy to combat current inflation, which represents the highest in 40 years.
According to some economists consulted by FactSet, the FED is expected to increase its reference interest rate by 0.100 percentage points, representing its fourth consecutive increase of close to one percentage point this year.
So far, the six increases already represent 3.75% so far this year, something the experts had not seen since 2007, this figure may even be higher if the Federal Reserve before the end 2022 makes another adjustment, which may be equal, that is, 0.100 percentage points.
The purpose of the increase in interest rates is to seek to reduce the consumption of Americans, since by h doing so, prices can be stabilized by not having a great demand.
Therefore, Americans who plan to acquire some debt should think twice, since paying it will be more expensive. Under this scenario, the impact on personal finances can be high, but especially for companies in the goods and services sector.
At the beginning of the year, the FED increased rates by minimal percentages, representing 0.25 and 0.5 percentage points, despite these movements, inflation did not increase, but neither did it decrease, so the The central bank was more aggressive in setting higher percentages.
One of the negative impacts for people who have acquired debts , especially, mortgages is that the movements of the FED make the percentage in this matter exceed 7% for the first time in two decades.
On the other hand, those who have debts with credit cards credit, the percentage has also gone up considerably. Not all financial entities have the same percentages in debt management, so there may be a variation.
Two weeks ago, the Bureau of Labor Statistics (BLS) announced that the interannual inflation rate fell for the third consecutive time in September and stood at 8.2%, despite this, consumer prices rose four tenths monthly.
Given how the economy is doing, it is expected that in 2023, the increases will continue, so the projections for the end of 2023 anticipate that the rates will rise to 4.6%. The FED indicated that from 2024 they will begin to decrease, so it is expected that in 2025 they will represent 2.9 percent.
You may also be interested in:
–More than half of Americans who earn between $75,25 and $150,25 live paycheck to paycheck
–The 41% of Americans Need Extra Income to Face Inflation: Bankrate Survey