The fed raises interest rates again

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If you were expecting the Fed to ease pressures on interest rates, you didn’t get your wish. The rate increases are coming a bit more fast and furious now, as inflation threatens to rear it’s ugly head.

The latest increase was another 25 basis points. Now the federal funds rate stands at 5.25%, which is the highest it’s been since 2001. Consumers may have to do some serious belt-tightening, if this keeps up. Inflation continuing to rise has been the fear that’s fueled the Fed to continue raising the interest rates. They’re cooling off the economy, but hopefully they won’t kill off all growth.

The Fed’s last meeting on May 10 ushered in a period of weakness and extreme volatility in global asset markets. Heading into Thursday, the S&P 500 is down 79 points, or 6%, since the last rate decision, while the Nasdaq Composite had lost 9.7%. In more than one-third of the 34 trading sessions since the May 10 announcement, the Dow Jones Industrial Average closed with a gain or a loss of at least 90 points.

The next meeting is on August 9th. Continous rate increases are bound to hit consumers with credit card debt or variable interest rate mortgages, as well as most other segments of the economy. It’s safe to say, you need to calculate the affect of interest rate increases into all of your investment decisions.

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