The Federal Reserve has raised interest rates to 5.5%, their highest point in more than 22 years, in an effort to combat inflation. Fed Chair Jay Powell said that the pace of inflation remains “much too high” and that the rate hike is necessary to reduce overall economic activity.
By making it more expensive for consumers and businesses to borrow money, the Federal Reserve hopes to reduce demand for goods and services, which tends to cause inflation. The idea is to raise costs now so that consumers and businesses don’t expect prices to increase in the future.
This move by the Federal Reserve has been met with mixed reactions. Some economists argue that it is necessary to combat inflation, while others worry that it could slow down economic growth. Only time will tell if this move by the Federal Reserve will have the desired effect.
