Economics/Class Relations

Understanding the pros and cons of the Fed’s rate hike

By Joel Mathis The Week

The Federal Reserve is going on offense against inflation. Fed Chairman Jerome Powell on Wednesday announced the biggest interest rate hike in two decades, and experts expect the Fed to raise the rate even more in the coming months.

“The Fed’s suite of policy changes underscored that the central bank is serious about cooling down the economy and the job market,” The New York Times reports. “Officials have grown increasingly nervous that price increases, which have lasted longer than many economists had expected, could become more permanent.” Here are some ways the rate hike could help or hurt the economy — and your wallet.

Pro: The Fed has finally abandoned its earlier caution

“For most of 2021, the Fed viewed surging inflation as a temporary problem that would go away on its own,” Neil Irwin writes at Axios. “They were late, but they’re aiming to make up for that by moving fast.”


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