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The Federal Reserve has hiked interest rates again, but this time it was a relatively small bump. We’ll also look at the McCarthy-Biden debt ceiling meeting, new federal rules targeting credit card fees and the surprising rise in job openings.
???? But first, see why Beyonce fans are not OK right now.
Welcome to On The Money, your guide to everything affecting your bills, bank account and bottom line. For The Hill, we’re Sylvan Lane, Aris Folley and Karl Evers-Hillstrom. Fed ups interest rates in smallest hike since March
The Federal Reserve raised interest rates by 0.25 percentage points on Wednesday at its first meeting of the year, its eighth straight rate hike since it began a program of tightening borrowing costs last year in an effort to bring down inflation.
It’s the smallest rate hike since last March, coming off a 50-basis-point hike in December that followed four, 75-basis-point hikes starting last June.
It will lift the federal funds rate to a range of 4.5 to 4.75 percent as the Fed pushes toward a projected target rate of 5.1 percent, which was last updated in December.
The background: The more modest increase comes as inflation has been falling throughout the economy.
The consumer price index (CPI) has dropped every month since June, landing at 6.5 percent annually in December. The personal consumption expenditures price index (PCE), which is the Fed’s preferred gauge of inflation, has fallen to 5 percent annually, off a June high of 6.8 percent.
With inflation coming down and unemployment levels remaining at a 50-year low, the Fed is aiming for what it calls a “soft landing,” meaning it wants to bring inflation back down to an annual rate of 2 percent without triggering a serious recession.
What caught our attention:
Fed Chair Jerome Powell said most Federal Open Market Committee (FOMC) members are not anticipating a recession this year: “Different participants have different forecasts, but generally those forecasts are for continued subdued growth, some softening in the labor market but not a recession — not a recession.
