The Federal Reserve is scheduled to release its latest federal funds rate data later today, at 4:15 PM Eastern Time. The federal funds rate is the interest rate at which banks lend money to each other overnight. It is a key benchmark for other interest rates in the economy, such as the prime rate and credit card rates.
The Fed has been raising interest rates aggressively in an effort to combat inflation. In July, the Fed raised the target federal funds rate range by 25 basis points to 5.25%-5.50%. This was the seventh consecutive rate hike.
Economists are widely expecting the Fed to raise rates by another 25 basis points today. This would bring the target federal funds rate range to 5.50%-5.75%.
The Fed is expected to continue raising rates until inflation comes down to its target rate of 2%. However, the Fed is also trying to avoid a recession. If the Fed raises rates too quickly, it could cause the economy to slow down sharply.
The release of the federal funds rate data later today will be closely watched by investors and economists. The data will provide clues about how quickly the Fed plans to raise rates and how close it is to achieving its goal of reducing inflation.
What to Expect for the Economy
The Fed’s rate hikes are already having an impact on the economy. Mortgage rates have risen sharply, and home sales have slowed. Consumer spending has also slowed, but the labor market remains strong.
If the Fed raises rates by 25 basis points today, it is likely to have a further impact on the economy. Mortgage rates will likely rise further, and home sales may slow even more. Consumer spending may also slow further. However, the labor market is expected to remain strong.
The Fed’s rate hikes are intended to bring inflation down to its target rate of 2%. However, the rate hikes are also likely to slow down the economy. The Fed is trying to find a balance between reducing inflation and avoiding a recession.
How to Prepare for Higher Interest Rates
If you are concerned about the impact of higher interest rates, there are a few things you can do to prepare:
- Pay down debt: The higher interest rates go, the more expensive it will be to borrow money. If you have any debt, such as credit card debt or student loan debt, try to pay it down as quickly as possible.
- Save money: If you have money saved, you will be less reliant on borrowing money. Aim to save at least three to six months of living expenses in an emergency fund.
- Diversify your investments: If you have money invested, diversify your portfolio across different asset classes, such as stocks, bonds, and cash. This will help to reduce your risk.
Keep in mind that the Federal Reserve is trying to find a balance between reducing inflation and avoiding a recession. The economy is still strong, and the labor market remains healthy. However, it is important to be prepared for higher interest rates and the potential for a slowdown in the economy.