Rising inflation and what can be done to combat it were discussed at the November meeting of the Federal Open Markets Committee (FOMC), according to its minutes of meetings. While members of the Federal Reserve, including President Jerome Powell, maintained their agreement that the rise in inflation is short-term, they said it was taking longer to fall than initially expected.
“Participants generally viewed the current high level of inflation as largely reflecting factors that may be transitory, but felt that inflationary pressures may take longer to subside than previously estimated.” , indicates the minutes.
If the central bank raises the federal funds rate, interest rates could rise. You can take advantage of the current low rates by refinancing your private student loans. Visit Credible to Compare Lenders and find your personalized rate in minutes.
Fed funds rate could rise sooner than expected
Inflation is currently rising to its fastest pace in decades, increasing by 6.2% per year in October, according to the latest data from the consumer price index (CPI). Today, some members of the Federal Reserve Bank are wondering whether to change the current monetary policy and raise the federal funds rate earlier than expected to combat inflationary pressures.
“Various participants noted that the committee should be prepared to adjust the pace of asset purchases and raise the target range for the federal funds rate earlier than currently expected if inflation continues to exceed levels consistent with the objectives of the Fund. committee, “said the minutes. .
Some participants suggested that the current plan to reduce asset purchases of more than $ 120 billion in bond purchases each month may need to be increased by $ 15 billion per month. This would put the Fed in a better position to raise rates.
Once the Federal Reserve ends its economic stimulus and considers a federal funds rate hike, interest rates could rise. You can now take advantage of low rates by taking out a personal loan to pay off other high-interest debts. Visit Credible to talk about comparing multiple personal loans at once and choose the one that suits you best.
COVID variants hamper economic growth
As the Fed considers when to raise rates, COVID-19 and its variants continue to be a cause for concern.
“The sectors most affected by the pandemic have improved in recent months, but the summer spike in COVID-19 cases has slowed their recovery,” the Fed said in its report.
And now the new Omicron variant could put even more pressure on the economic recovery. Financial markets are currently worried that the variant could lead to further restrictions and further stimulate inflation.
“Participants noted that the trajectory of the economy continued to depend on the evolution of the virus,” said the minutes. “Advances in vaccinations and an easing of supply constraints should support continued gains in economic activity and employment as well as lower inflation, but risks to the economic outlook remain.”
The Federal Reserve is should increase rates above its target rate of 0% to 0.25% next year if the economic recovery continues. If you want to take advantage of today’s low rates, consider refinancing your mortgage at lower your rate and save money on your monthly payment. Visit Credible to speak to a mortgage expert and get all your questions answered.
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