Fed increases rate to 1.75%-2% and signals more rate increases to come

Today the Fed increased the short term rate and signals more rate increases to come

Fed chair Powell points to the low unemployment rate and rising inflation as a justification for the rate increase.

The federal funds rate, which helps determine rates for mortgages, credit cards and other borrowing, now stands at a range of 1.75% to 2.0%.

The Fed is expected to increase it again later this year. Analysts are concerned that there will be another 2 rate hikes this year. It is also the consensus that chair Powell will increase the rate in September but he may surprise the market and add more rate hike in December.

The Fed has a tricky job:  It wants to raise interest rates steadily to slow down inflation, but on the other hand, it realises that raising rates too quickly could help start a recession.

 

 

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