December 14, 2022
That guy is super important. He’s the Federal Reserve Chairman and he announced a 0.5% increase in interest rates today. I’m going to show you what else he said today about future of interest rate hikes in a second…
But first – let’s talk about today’s move and what it means. Another increase in interest rates means borrowing money for you, me and business is going to be 0.5% more expensive today than it was yesterday. Your credit card interest rate is impacted by this, so is a new car loan and some mortgage rates. And yes, 0.5% is a big increase, but it’s less than the last four straight so-called “jumbo” rate increases of 0.75%.
So the real question is what’s next? Let’s hear from Chairman Powell.
Don’t worry – if you don’t get what he’s talking about – I’m going to explain.
The Fed’s focus is to get inflation down to 2%. It’s currently at 7.1%. And they are laser focused on getting it down – no matter what it takes even if it means continuing to raise interest rates in 2023.
They are *not* focused rate cuts anytime soon.
Though they do believe the previous rate increases have helped…it’s not enough and they’re going to keep going.
They screwed up in the past – they cut the interest rate too early – and inflation went right back up. They ain’t makin’ that mistake again.
The Fed had originally suggested they could start cutting these interest rates by the end of next year. But because inflation is so stubborn and hasn’t been coming down fast enough this year, they aren’t considering cutting the rates in 2023 anymore. And won’t until they’re all “confident” inflation is down and will stay there.
The Fed is also predicting a couple other things in 2023 – slower GDP growth, meaning a slowdown of all the production of goods and services in the United States… housing costs continuing to go up – at least through the first half of the year – and a slightly higher unemployment rate which translates to about 1.6 million jobs lost next year. The Federal Reserve will meet again in late January.
