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The Fed has raised its interest rate three times in a row by three-quarters of a point to combat excessive inflation.
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The Fed hiked its short-term rate to 3% to 3.25 % on Wednesday, the highest level since early 2008.
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The policymakers also made it clear that by the beginning of 2023, they expect to have raised rates even more than they thought they would in June.
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Last Monday, the government released a report demonstrating that high prices are spreading. Even though petrol prices have gone down, rents and other services are rising.
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Fed rate hikes make house, vehicle, and business loans more expensive. Consumers and firms would borrow and spend less, cooling the economy and reducing inflation.
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Fed officials seek a "soft landing," meaning they aim to reduce growth enough to lower inflation but not precipitate a recession.
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Economists are more certain that the Fed's fast rate hikes will bring job cuts, increased unemployment, and a recession by the end of this year or the beginning of next year.
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Fed Chairman Jerome Powell cautioned last month that Fed actions will "hurt" individuals and businesses. The central bank "unconditionally" targeted 2% inflation.
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Falling gas prices have made headline inflation a little less bad, but it was still 8.3% in August compared to a year earlier.
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Lower gas costs may have boosted President Biden's popularity. Democrats hope this will help them in November's midterms.
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