Fed Raises Rates Another 25 Basis Points—Signals More Hikes Still To Come
ForbesAUG 2022
By raising interest rates, the central bank hopes it can slow down the economy enough to dampen the soaring inflation. As the theory goes, the more expensive it gets to borrow money or carry a balance on a credit card, the less consumer will spend. And when spending declines, demand will fall, and within some time, the price of everyday goods. There are signs inflation is starting to cool, so it's working.
Eight Fed rate hikes in little more than a year haven't yet stopped prices from going down. While some of this is due to factors outside of the bank's control, such as supply chain issues and the war in Ukraine, most of it is driven by greedy, monopolistic corporations that continue to raise prices and profit margins. By continuing to raise rates rather than slowing corporate price increases, the Fed is letting workers and consumers take the hit. It's time to open its toolbox and look for other measures to reduce inflation.