Attaining the highest level seen since the spring of 2007, the Federal Reserve has raised interest rates to around 5.2% in one more effort to stave off runaway inflation.
The action marks the 10th time in the last year that interest rates have been increased, leading to a double digit jump in mortgage rates, while also upping business loan and credit card borrowing costs.
Despite the recent interest rate acceleration, Federal Reserve Chairman Jerome Powell remarked that “rates are going to come down” over an undefined extended period, most likely later this year.
Powell made the announcement at the conclusion of a two-day meeting with the Federal Open Market Committee.
“The Committee will closely monitor incoming information and assess the implications for monetary policy,” said Powell.
“In determining the extent to which additional policy firming may be appropriate to return inflation to 2 percent over time, the Committee will take into effect the cumulative tightening of monetary policy,” continued Powell.
While the current rates may seem impressive to some, they pale in comparison with where things were in the early 1980s when the rates stood at just a little over 18%.
In a news conference, Powell also refused to be drawn into the ongoing skirmish currently being played out in Washington between President Biden and Congress regarding the possible rising of the government’s debt limit.
“We don’t give advice to either side,” said Power. “We would just point out that it’s very important that this be done.”
Added that Chairman: “We shouldn’t even be talking about a world in which the U.S. doesn’t pay its bills. It just shouldn’t be a thing.”
By Garry Boulard
