Experts predict 2023 will be another rough year, as prices remain high and interest rates push up the cost of borrowing. Smaller rate hikes don't mean that the economic downturn is almost over. What higher interest rates mean for the economy In fact, more Americans are living paycheck to paycheck, and wages aren't keeping up with inflation rates. While the pace of inflation is slowing, prices are still rising across the board, particularly for groceries and housing.ĭuring periods of high inflation, your dollar has less purchasing power, making everything you buy more expensive - even though you're likely not getting paid more. High inflation levels have stemmed primarily from an increase in gas, food and housing prices. Now, inflation sits 6% higher than last year, according to the Bureau of Labor Statistics. Last year, inflation remained high, soaring to record-breaking levels in June, when it hit a 9.1% yearly increase. Below, experts weigh in on inflation predictions, recent bank failures and what the latest rate hike means for your money. That said, Powell indicated that the bank isn't done hiking rates and will continue to do so appropriately.
With inflation finally showing signs of cooling, the Fed is raising rates less aggressively. In response, the Fed has aggressively raised interest rates, its top tactic to try to lower rising prices. From groceries to gas, inflation has been squeezing Americans over the last 12 months. Over the last year, the Federal Reserve has been working to temper rising prices. "Reducing inflation is likely to require a period of below-trend growth and some softening in labor market conditions." "Inflation remains too high and the labor market continues to be very tight, said Powell in a March 22 press conference. Despite the recent bank failures of Silicon Valley Bank and Signature Bank, the fight to lower inflation continues - but less aggressively than before. In fact, the economic downturn may just be getting started.Įven though inflation is slowing down, Fed Chairman Jerome Powell indicated that work still needs to be done to stabilize prices. It's a game-changing move that may indicate that past rate hikes are working, but the job of lowering inflation isn't done. The increase pushes the rate to the highest it's been since May 2006, according to the Federal Reserve. The Federal Reserve raised interest rates for the ninth time on March 22, hiking rates by 0.25% and bringing the federal funds rate range to 4.75% - 5%. This story is part of Recession Help Desk, CNET's coverage of how to make smart money moves in an uncertain economy.
0 kommentar(er)
