Credit tightens as the economy begins to slow.
On Wednesday, the Federal Reserve raised its benchmark interest rate by three-quarters of a point for the second straight time in an attempt to temper high inflation. The move will raise the Fed’s key rate, which affects many consumer and business loans, to a range of 2.25 percent to 2.5 percent, the highest level since 2018.
The central bank’s decision follows a rise in inflation to 9.1%, the fastest annual rate in 41 years, and reflects its efforts to slow price gains across the economy. By raising borrowing rates, the Fed makes it costlier to take out a mortgage or an auto or business loan. Consumers and businesses then presumably borrow and spend less, cooling the economy and slowing inflation. The new average rate for a 30-year fixed mortgage has roughly doubled in the past year to 5.5 percent, causing home sales to drop.
As the Lord Leads, Pray with Us…
- For Federal Reserve Chairman Powell and the board members as they address inflation by raising interest rates
- For discernment for the president and his advisors as they implement policies that further impact the economy.
- For the Lord’s purposes to be accomplished in the United States.
Sources: Wall Street Journal, Newsmax
