LANSING, Mich. (WLNS) – Inflation is starting to ease, hiring is slowing down and the red-hot real estate market has cooled.
With that in mind, Federal Reserve Chairman Jerome Powell announced an interest rate hike of just a quarter point, the smallest increase since the Fed began raising rates last March.
“Shifting to a slower pace will better allow the committee to assess the economy’s progress toward our goals,” said Powell.
The central bank is walking a fine line: trying to slow the economy enough to pull down inflation while avoiding a recession.
“The Fed reduced the amount of the interest rate increase because the data have been improving. Growth is already slowing down. Consumers are pulling back on spending, so are businesses. And we are seeing that inflation is starting to slowly start to go down,” said CBS Financial Analyst Jill Schlesinger.
Prices are easing but it costs more to borrow money.
The average rate on a 30-year mortgage is 6.13%, that’s actually down from previous weeks but still way above 3.55% at this time last year.
The average used car loan is 10.6%, up from 7.5% a year ago. Credit card rates are just under 20%.
Powell says the board will continue to boost rates as needed.
“They are going to look at data. They are going to help the drive their decisions with a determination about whether or not growth is slowing down enough to bring down the inflation rate,” said Schlesinger.
The Federal Reserve makes its next decision in March.