Will the Fed Raising Rates Help or Hurt the Economy? Take Our Poll
With inflation at 8.6%, its highest level in 41 years, and stocks now in a bear market, the Federal Reserve raised interest rates by 0.75% this week. It was the biggest boost in 28 years, with Fed Chair Jerome Powell calling it “unusually large.”
“We wanted to do more front-end loading,” he said. “It was about the speed.”
This bump comes on the heels of a 0.5% raise in May. With inflation not easing, the Fed is expected to raise rates again in July — possibly by a bigger margin. The higher rates are designed to slow consumer spending and bring prices back down.
Experts warn though that the Fed needs to be cautious about slowing the economy so much that it hurts employment and creates a recession.
The Fed seems optimistic, saying, “Overall economic activity appears to have picked up after edging down in the first quarter. Job gains have been robust in recent months, and the unemployment rate has remained low. Inflation remains elevated, reflecting supply and demand imbalances related to the pandemic, higher energy prices and broader price pressures.”
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