In another effort to fight inflation, the Federal Reserve announced on Wednesday a raise to its benchmark key interest rate by three-quarters of a percent.
This is the second time that the Fed has hiked interest rates by three-quarters of a point as it looks to drive down inflation that’s the highest it’s been this century, the Federal Reserve reported.
The rise in interest rates will affect customers and business loans from 2.25% to 2.5%, the highest level since 2018.
Inflation in June jumped to 9.1%, the fastest annual rate in 41 years. By raising borrowing rates, the Fed has now made it costlier for Americans to take out auto or business loans and mortgages. This will, in turn, force consumers to spend and borrow less, cooling the economy and slowing inflation.
While the Fed continues to try and fight inflation and rising prices, many have become fearful that rate hikes will spark a recession later this year or early next.