The FOMC today said it is raising interest rates by another 0.75% to tame runaway inflation. Central Bankers have said they are committed to slowing down inflation even if it slows the economy, and the collateral damage would be a recession.

These interest rates are set for banks on overnight borrowing between the banks, but the higher interest rates often trickle their way into the everyday consumer (you). Higher interest rates make adjustable mortgages more expensive, and credit cards interest rates will be higher. At the start of 2022, the average credit card interest rate was around 16.3% and now sits around 17.25% according to bankrate.com, and 30 year fixed rate stood at around 3%, now it currently sits near 6%.. The era of easy money (which is what got us into this inflationary mess) is over, so expect higher rates on any debt obligations.

Jerome Powell did note that spending has softened, but employment is high and that he doesn’t believe the U.S. is in a recession. Hard to argue that we are in a recession with the employment data we have, but regardless signs of softening are appearing and the yield curve inversion would also tell us otherwise.

The Fed said it will depend on that data for a decision at its September meeting if it will raise interest rates or keep them where they are. For you Fed watchers, that means pay attention to CPI and PPI reports they will give us some insight into whether we see a interest rate hike by 0.5% or no rate hike at all. Powel did cite that spending has softened, so this could be the peak of inflation we are patiently waiting for.