That inflation means the Federal Reserve has been ratcheting up its benchmark short-term interest rate, the federal funds rate, to try to crumble consumer demand and bring prices down. The federal funds rate is a short-term rate that affects what banks charge each other, but it sends ripple effects through the economy, affecting what businesses and consumers pay to take out loans.
, chief economist at CoStar Group, a real estate analytics provider. “[Powell] was trying to balance a message about having to go higher with it might take a little bit longer.”The cost of getting a mortgage is just one noteworthy example of this new rate environment — mostly because it’s drastically slowed down the
are also on the rise, with high-yield accounts, typically from online banks, offering returns of more than 3%. Whether this era of higher rates is a temporary blip or if the past decade of low rates was the exception is anyone’s guess. Experts say regardless of the long-term outlook, expect rates to stay high for at least a little while.
A new equilibrium could be somewhere lower than where interest rates are now, but higher than they’ve been in recent years. “We will see interest rates higher for the foreseeable future as we try to stop the U.S. economy from overheating and getting to a more healthy place,” says, chief economist at Zonda, a home construction data firm. “I think that over time we will probably see interest rates come back down. I don’t think to 2% or 3%.
“A lot of households will need to tighten their belts and cut down on any expenses they can in order to cover those really big ticket items,” Tucker says.
NextAdvisor There was an era of cheap money? And I missed it? F&k
NextAdvisor I think it's a weak point or problem of the existing economic system. Amen