The Federal Reserve is trying to tweak rates enough to extinguish inflation but not so far as to send the economy into a recession.
Central bankers have been resolute in their fight to tame high prices, making clear they won’t let up prematurely. That has led the Fed to hike its benchmark policy rate more than 5 percentage points since March 2022, a historic pace designed tofor all kinds of goods and services, including mortgage rates, auto loans and business hiring.
Fed leaders have set expectations for another quarter-point hike at the conclusion of their two-day policy meeting, which would bring the federal funds rate to between 5.25 and 5.5 percent. But the decision comes at a tricky time. Last month, officialsso they could understand what was happening in the economy, including with the job market, inflation and wages. The Fed is essentially trying to tweak rates gently so they don’t go too far and send the economy into a recession.
An interest rate hike will affect anyone with a home mortgage, car loan, savings account or money in the stock market. The choice will hinge on a range of factors that make the economy difficult to read in real time. Rate hikes work with a lag, and it’s unclear when the full scope of the Fed’s policies will hit. Experts
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