Source: CNBC —
This week, the Federal Reserve will likely raise rates for the sixth consecutive time to combat inflation, which is still running at its fastest pace in nearly 40 years.
The U.S. central bank has already hiked its benchmark short-term rate 3 percentage points since March, including three straight 0.75 percentage point increases ahead of its upcoming policy meeting.
“The impact of what’s been done isn’t fully reflected yet,” said Chester Spatt, professor of finance at Carnegie Mellon University’s Tepper School of Business and former chief economist of the Securities and Exchange Commission. “Inflation hasn’t come down much so far, in part because these policies take a while to kick in,” he said.
In the meantime, “the impacts on the consumer have created potentially difficult economic circumstances and are likely to get considerably worse as we get more of these rate hikes kicking in,” he added.
The next rate hike, which is widely expected to be the fourth straight 0.75 percentage point increase, will correspond with another rise in the prime rate and immediately send financing costs higher for many types of consumer loans.
“The cumulative effect of rate hikes is what is really going to have an impact on the economy and household budgets,” said Greg McBride, Bankrate.com’s chief financial analyst.
In fact, borrowing is already substantially costlier for consumers across the board.
What a rate hike means to you
;
Doesn’t effect me as far as the banks or concerned. I’m still getting
.01% on about 50K I have in 2 banks. That works out to 10 cents per month on every 12 thousand I have in these 2 institutions. I know they are taking advantage of me and I will probably go see them in the next month and just close out the accounts. I learned long ago in business it’s easier to retain your current customers than loose them and then go attempt to get them back. Are you listening First South and TD banks?
“Inflation hasn’t come down much so far, in part because these policies take a while to kick in,”
Instead of solving the supply issues, it will take a while to make us poor. Once they make us poor, they’re hoping that inflation will come down. Acedemic Morons!