Another rate hike is likely this month, according to the Federal Reserve’s meeting minutes
The Federal Reserve released its June meeting minutes this week, stating that a 75 basis point rate hike may be on the table at the Federal Open Market Committee (FOMC) meeting later this month.
The Federal Reserve’s meeting minutes show what FOMC members talked about during their June meeting, and revealed their willingness to raise interest rates again at the July meeting.
The minutes stated that “many participants felt that the great danger now facing the committee is that high inflation could take hold if the public begins to question the committee’s decision.” “They recognized the possibility that a more restrictive stance would be appropriate if high inflation pressures persisted.”
In June, the Fed raised interest rates by 75 basis points, the highest increase since 1994. The increase was the third rate increase for 2022 and pushed the target range of federal funds from 1.5% to 1.75%.
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The Federal Reserve raises interest rates by the largest increase since 1994
Inflation remains at a 40-year high
Inflation is currently rising to a 40-year high, and is showing no signs of slowing down. The Consumer Price Index (CPI), a measure of inflation, rose 8.6% annually in May, according to the latest report from the Bureau of Labor Statistics (BLS). This comes after inflation eased slightly in April, falling to 8.3% annually. On a monthly basis, inflation rose 1% from April to May.
At a press conference after the June meeting, Federal Reserve Chairman Jerome Powell said another 75 or 50 basis point increase would likely be warranted as inflation continued to rise.
Experts expect the Federal Reserve to continue raising interest rates after its July meeting due to these inflation expectations. There may be several price increases in the next year and into 2023.
“The FOMC has followed through on the largest rate hike since 1994, and median committee member expects another 175 basis points of hikes before the end of the year,” Kurt Long, chief economist at the National Association of Federally Secured Credit Unions (NAFCU) and vice president of Research, he said after the last meeting of the Federal Reserve. “This is a sharp departure from the committee’s expectations three months ago, and the rest of the economic forecasts confirm it.”
If you’re struggling with today’s inflation, consider refinancing your private student loans — before interest rates go up any further — to reduce your monthly payments. Visit Credible to compare several student lenders at once and choose the lender that offers the best interest rate for you.
Inflation hits 40 new years in May with no sign of slowing
What does this mean for your wallet
Interest rates for many types of credit will be affected by the Fed’s actions because interest rates follow the direction of the fed funds rate.
When the central bank starts raising rates, borrowers with credit cards and adjustable rates or other short-term interest rates that change with market conditions will be affected first. Other interest rates will also be affected including homeowners with adjustable mortgage (ARM) mortgages.
If you have ARM, or another form of credit with interest rates that could go up in the coming months, refinancing may help you keep the rate down. Compare the interest rates of several lenders and get the best rate for you.
Contact Credible to speak to a mortgage expert and have all your questions answered.
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