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How will the Fed interest rate hike affect you?

Instead of a blog post today, I wanted to share this article with my readers. Many people don’t know the ins and outs of a federal rate hike. Hope this helps!

How will the Fed interest rate hike affect you?
How will the Fed interest rate hike affect you?

How will the Fed interest rate hike affect you?

Samantha Masunaga, Somesh Jha, Andrew Khouri
Los Angeles Times

(TNS) – Consumers are already paying more for gas, groceries and everyday items, but they should expect to fork over more in other parts of their lives after Wednesday’s interest rate increase.

The Federal Reserve’s move to rein in inflation will affect home mortgage loans, credit card borrowing, car loans, labor market stability and overall consumption. The goal is to reduce the amount of money supply in the economy.

“Too much money makes the money less valuable,” said Larry Harris, professor of finance at the USC Marshall School of Business and former chief economist at the U.S. Securities and Exchange Commission. “To control inflation, the Fed has to stop creating so much money. And when it stops creating money, interest rates tend to rise.”

Though the Fed doesn’t set the interest rates consumers pay on their credit cards, mortgages or personal loans, it controls the federal funds rate, which is the basic rate at which banks borrow and lend from each other. When that moves, so do consumer interest rates.

Click here for the full news article. Don’t worry–it’s an easy, quick read!

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©2022 Los Angeles Times. Visit at latimes.com. Distributed by Tribune Content Agency, LLC.

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Kimmer Plunk

Based in Memphis and serving clients in West Tennessee and Northwest Mississippi. Serving others is a reward of its own and part of what makes me happy, and I've been doing that for 30 years through various activities including Girl Scouts, PTO, various board positions, unhoused ministry, and professional (award-winning) teaching. I treat others the way that I want to be treated including being readily available, listening to your desires, answering your questions thoroughly, and walking you through the home purchase process. My ultimate goal is to see that you find the home of your dreams and experience the least amount of stress during the process.

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