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The Fed is raising rates again as high as 0.75% as it hits its highest level in 14 years – how that will affect you

The Federal Reserve has hiked rates again, with the range set at up to 3.25%.

The central bank said interest rates rose three-quarters of a point after its Federal Open Market Committee meeting.

The federal funds are thus in the range of three percent to 3.25 percent and mark the highest level for 14 years.

This is the fifth time this year that the Fed has taken action to curb high inflation, with the latest data showing it stood at 8.3 percent in August.

After its last meeting in July, the Fed hike announced the same 0.75 percentage point hike.

However, Americans are likely to face some economic pain as the Fed looks to try to stop prices from rising so quickly.

Thousands of Americans are lining up for a pay rise of up to $11,700

What the rate hike means for you

The measures will make borrowing even more expensive.

The increase is likely to affect interest rates, which are the interest rates lenders charge on credit card balances.

The key interest rates are chosen by the individual banks.

And while the Fed technically has no control over this process, most banks adjust their interest rates based at least in part on the federal funds rate.

It can also affect Americans with a mortgage, since adjustable mortgages are tied to the Secured Overnight Financing Rate (SOFR).

The New York Fed publishes SOFR every business day.

After the Fed’s 50 basis point hike in May, SOFR rose from 0.30 to 0.79 overnight.

Since the end of July, the SOFR rate has averaged over two.

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On September 20, the SOFR rate was set at 2.26 percent.

“The Fed has hiked interest rates by 3 percentage points since March and for borrowers,” Greg McBride, Bankrate’s senior vice president and chief financial analyst, told The Sun.

“That means your credit card rate and home equity interest rate will now be 3 percentage points higher than they were earlier in the year,”

But more expensive credit isn’t the only thing that will hurt Americans.

Many economists fear that the Fed’s rate aggression will trigger a recession.

In fact, Mr McBride now estimates the likelihood of a recession to be “fairly high”.

“Easily 75%,” he said.

“But even worse would be if the Fed doesn’t do the job and we endure a prolonged stagflationary environment like we did in the 1970s, where inflation and unemployment are high and the economy can’t get out of its own way.”

Data from the Bureau of Labor Statistics showed the unemployment rate was 3.7 percent in August, about the same as before the pandemic.

But that could change.

Fannie Mae, created by Congress in 1938 to help Americans buy and rent homes, predicts the unemployment rate will rise to 5.5 percent by the end of next year.

to make moves now

As interest rates continue to rise, Americans with debt will ideally want to pay it off as soon as possible.

This is especially true for those who have debt with adjustable interest rates that change regularly.

Keep in mind that many credit cards have adjustable rates.

Most car loans, on the other hand, have fixed interest rates.

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When possible, McBride recommends consumers either pay off variable-rate loans as quickly as possible or “refinance into fixed-rate loans” when possible.

And, of course, opening new credit isn’t ideal when interest rates are rising.

But if you must, make sure you compare the price for the best rate from each lender.

After today’s hike, the Fed is likely to hike rates at its remaining meetings of the year.

The next ones will take place on 1.-2. November and 13-14 held in December.

For more related stories, here are the best ways to use your tax refund and make it grow.

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