SPRINGFIELD, Mass. (WWLP) – Consumer price growth cooled in November, indicating a slowing economy. It’s a sign that the Federal Reserve’s aggressive rate-raising campaign to fight inflation is starting to pay off.
22News is working for you on why the Federal Reserve is expected to raise rates again. November’s data shows that inflation is slowing, but prices have not yet gone down.
This is why the Federal Reserve is expected to raise rates for the 7th time this year.
On a year-over-year basis, inflation hit 7.1 percent in November. That’s a slowdown from the 7.7 percent in October.
However, the consumer price index, seasonally adjusted, shows the prices for all urban consumers, still rose 0.1 percent. Raising rates increases the cost of borrowing and investing…. with the goal of reducing demand.
The U.S. central bank will likely approve a 0.5 percentage point hike. This would push benchmark borrowing rates to a target range of 4.2% to 4.5%.
Another increase in rates will send financing costs even higher for many forms of consumer debt. Like mortgages, credit cards, and student loans, causing people to borrow and spend less.
If predictions are correct, this next raise in rates will be less than the previous four it issued most recently. Today’s meeting will be the last of the year.