Today, officials at the Federal Reserve are meeting to discuss how much they’ll hike the central bank’s benchmark interest rate as part of their ongoing campaign to control inflation. They’ll announce what they decide tomorrow afternoon, and most experts are looking for another 75 basis-point jump (a hefty chunk by historical standards) but an aggressive 100-point hike isn’t out of the question. A higher fed funds rate means it’s more expensive for banks to borrow money, so they’ll likely charge you more interest on your credit cards and loans. Also, if you’re looking to buy a home, the fed funds rate indirectly affects your mortgage rates, which are already on a sharp upward trajectory. Businesses are impacted too, since higher interest rates make it harder to borrow money, expand their operations, and hire new workers. With the Fed’s higher rates creating such a drag on the economy, it’s little wonder that many economists see a recession hitting as soon as next year. This article originally appeared in ‘The Balance Today’ newsletter. You can get ‘The Balance Today’ delivered to your inbox daily, just sign up here.
