If the economy is strong and high inflation persists, the Federal Reserve may increase the scope of its interest rate hikes, according to a Senate panel Tuesday, according to Jerome Powell, Chair of the Federal Reserve.
The latest economic data has come in stronger than expected, which suggests that interest rates are likely to be higher than previously anticipated, Powell said. If the data showed that faster tightening is warranted, we would be prepared to increase the pace of rate hikes. Experts believe that the Fed will increase its key interest rate by half-percentage point at its next meeting, which takes place March 21 -- 22. The Fed raised interest rates by 25 basis points in February. The federal funds rate went from 4.5% to 4.75%, its highest level in 15 years.
If the Fed increases rates, it may affect interest rates tied to products like credit cards and mortgages.
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Evidence suggests that inflation may persist through 2023 after a year marked by rising prices for basic goods. In December inflation increased by 6.5% based on the Consumer Price Index CPI, which is a slowdown from the 7.1% increase in November. The rate has not slowed much from its June peak of 9.1%.
Many Americans are struggling to make ends meet due to rising prices. According to a November poll by YouGovAmerica and The Economist, more than half or 52% of Americans said inflation had a significant impact on them. More than half of the real-estate data company Clever said that the cost of goods would continue to rise in 2023, meaning that more than half 62% expected that the cost of goods would go up in the year 2023.
The Americans expect inflation to continue in 2023, but they also expect it to get worse, Clever said in its report. Only 12% expect prices to decline. If you are struggling with high-interest debt, you can pay it off with a personal loan at a lower rate. You can get your personalized credit score without having to change your credit score.
The rate of inflation has slowed down in recent months, but many Americans are worried about a possible recession. The Fed's interest rate hikes could cause the country to go into a recession.
The First National Bank of Omaha FNBO said in its 2023 Outlook report that the economic downturn in the U.S. is likely to occur as most economic indicators point to a deceleration at the minimum and/or probable contraction. Economic growth may be negatively impacted by monetary tightening and higher interest rates by the Fed. According to YouGov poll, 56% of Americans believe the nation is already in a recession.
In a statement, Morning Consult Chief Economist John Leer said consumers are struggling to navigate the ongoing effects of the spike in prices last year by drawing on credit and savings. Business investment is expected to slow down in the coming quarters, increasing the chance of a recession this year, with consumer demand likely to continue its downward trajectory. If you are struggling with high-interest debt, you might consider paying it off with a personal loan. You can talk with a loan expert at Credible to find out if this option is right for you.
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