(NewsNation) — For the sixth time this year, the Federal Reserve announced it will raise interest rates in an effort to curb inflation, meaning the cost of borrowing for the everyday American will become more expensive.
“The longer the current bout of inflation continues, the greater the chance that expectations of higher inflation become entrenched,” Fed Chair Jerome Powell said.
The Fed announced the hike on Wednesday, raising rates by three-quarters of a point for a fourth straight time. The move raised its key short-term rate to a range of 3.75% to 4%, its highest level in 15 years.
How does a rate hike of three-quarters of a point impact you?
Millions of Americans are going to start noticing extra money leaving their bank account.
The average payment for a new home loan and variable mortgages will go up more than $200. For those paying off a credit card, they should expect to tack on an extra $35, and for those looking to buy a new car, an additional $60.
Here are the top three takeaways:
- Interest rate hikes will continue.
- A recession will be harder to avoid.
- Everyday people are going to feel the effects of high-interest rates.
“These rate hikes are impacting essentially every piece of someone’s financial architecture,” NewsNation business contributor Lydia Moynihan said. “We’re seeing mortgages rise in direct correlation with what the Federal Reserve is doing with interest rates. We’re seeing mortgages surge above 7% and Jerome Powell signaling yesterday that interest rates could go even higher than expected.”
Moynihan explained that Powell said that interest rates could go much higher than he originally projected and that he will push them as high as they need to be.
“We anticipate ongoing increases in the target range for the federal funds rate will be appropriate in order to obtain a stance that is sufficiently restrictive to return inflation to 2% over time,” Powell said.