Fed Rate Hike Odds Rise Ahead of Next Policy Meeting
Markets and economists are divided on whether the Fed will raise rates again in two weeks. Here's what you need to know.
The Federal Reserve's next policy meeting is shaping up to be a real nail-biter. Market participants and economists are genuinely split on whether the Fed will push interest rates up by another quarter-point — that's 0.25 percentage points, for the uninitiated — when officials gather in roughly two weeks.
So what does a quarter-point hike actually mean for you? In plain terms, borrowing gets a little more expensive. Think credit cards, auto loans, and mortgages. The Fed raises rates to cool inflation, but the tradeoff is that it can also slow economic growth and make everyday debt costlier to carry.
Read more How Boomer Wealth Is Quietly Propping Up US Consumer Spending →
The fact that even the pros can't agree on what's coming is itself a signal worth paying attention to. When smart money is split down the middle, it usually means the Fed has kept its cards close to the chest — or that the incoming economic data has been sending mixed signals. Either way, the uncertainty tends to make financial markets jittery in the days leading up to a decision.
What most observers do seem to agree on is that the Fed is operating in a tricky environment. Rate hikes take time to work their way through the economy, and there's always a risk of overdoing it — raising rates so much that a recession becomes more likely than the inflation the Fed is trying to fight.
Bottom line: the next couple of weeks could be pivotal for anyone watching their mortgage rate, savings account yield, or investment portfolio. Stay tuned, because this decision is genuinely too close to call right now. Continue reading at MarketWatch.com
