The Federal Reserve is pausing on raising rates, marking the first break after 15 months of consecutive increases, a change that could offer a hint of relief for consumers who are grappling with pricier mortgages, credit cards and other loans after 10 consecutive rate hikes.
The difference in borrowing costs from March 2022, when the Fed began hiking rates in an effort to quash inflation, are stark. In early 2022, the rate for a conventional 30-year mortgage was about 3.2% — now it is 6.8%, meaning that the monthly mortgage payment on a typical $300,000 home now costs 50% more. The annual percentage rate on credit cards has hit record highs and now top 20%, while costs for other loans are also higher.
The central bank has been hiking rates in order to douse the hottest inflation in 40 years. The good news is that federal data on Tuesday showed that effort is working, with May’s Consumer Price Index rising at the slowest pace in two years. Because of the progress on inflation, economists had expected the Fed to hold off Wednesday on another rate hike in order to gauge the economy’s strength and to make sure the bank isn’t
The Federal Reserve is pausing rate hikes for the first time in 15 months. Here’s the financial impact.
