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Fed raises interest rates by quarter-point, eyes more hikes in coming months

Sheila Bair CNN Fed Rate Hike
Thought Leader: Sheila Bair
May 3, 2023
Source: CNN

See source for video.

The Federal Reserve announced today its tenth rate increase since last March, raising its policy interest rate by a quarter percentage point. This decision comes just two days after the collapse of First Republic Bank, the second-largest bank failure in U.S. history.

Federal Reserve Chairman Jerome Powell stated, “Without price stability, the economy does not work for anyone. Taming inflation remains the Fed’s top priority.”

Raising interest rates allows the Fed to intentionally slow parts of the economy by making it more expensive for banks to borrow money, and that cost gets passed on to the consumer. According to Mark Zandi, Chief Economist at Moody’s Analytics, “If you got a personal loan, uh, you’re gonna see your rate go up a home equity line of credit. You’ll, you’ll see your rate go up and of course, if you need to borrow money for anything like a new car.”

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