NATIONAL NEWS

The Fed makes history with 4th straight three-quarters-point rate hike

Nov 2, 2022, 12:17 PM | Updated: 9:17 pm

(CNN) — The Federal Reserve approved a fourth-straight rate hike of three-quarters of a percentage point on Wednesday as part of its aggressive battle to bring down the white-hot inflation that is plaguing the U.S. economy.

The supersized hike brings the central bank’s benchmark lending rate to a new target range of 3.75% to 4%. That’s the highest the fed funds rate has been since January 2008.

Wednesday’s decision, which comes at the end of a two-day policy meeting of the Federal Open Market Committee, marks the Fed’s toughest policy move since the 1980s and will likely deepen the economic pain for millions of American businesses and households by pushing up the cost of borrowing even further.

There’s also a chance it could trigger a recession.

In a news conference following the meeting, Fed Chairman Jerome Powell acknowledged that the path to a soft landing — cooling the economy without entering into a recession — had narrowed, but said it is still possible.

“The inflation picture has become more and more challenging over the course of this year,” he said. “That means we have to have policy be more restrictive, and that narrows the path to a soft landing.”

He also reiterated his commitment to bringing down inflation and his stance that persistent, entrenched inflation will cause greater economic pain than a recession.

Fed officials included a new section in their November statement — a rarity, since the Fed typically repeats the same language in each release. The Federal Open Market Committee, the central bank’s policymaking arm, “anticipates that ongoing increases in the target range will be appropriate in order to attain a stance of monetary policy that is sufficiently restrictive to return inflation to 2 percent over time.”

Fed watchers may interpret the addition of “over time” to their inflation rate target as dovish, meaning that the Fed may choose to ease away from aggressive rate hikes into smaller, but longer-term increases.

In addition, the statement noted that: “In determining the pace of future increases in the target range, the Committee will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments.”

This new language could also pave the way for an eventual easing in interest rates as it acknowledges that monetary policy may already be effectively cooling the economy even as economic data, which often operates on a lag, indicates strong growth.

Wall Street may also consider that language a response to a recent increase in criticism that the Fed is overcorrecting with aggressively high interest rate hikes that could damage the economy unnecessarily.

Recent data only underscores the “choose your own adventure” aspect of the U.S. economy: Mortgage rates at levels not seen in almost 20 years are beginning to choke the housing market. Sales of newly constructed homes dropped 10.9% in September from August and were down 17.6% from a year ago.

Yet some inflationary pressures are easing. Wages and salaries rose by 1.2% in the third quarter, down from 1.6% in the second, according to the Employment Cost Index.

And through it all, the job market has remained tight. Job openings unexpectedly surged in September, indicating there are 1.9 job openings for every available worker. Friday’s upcoming jobs report is expected to show the economy added another 200,000 positions in October, down from last month but still historically high.

Impact of rate hike on Utah families

Utah families are struggling due to the double whammy of inflation and higher borrowing costs, explained Mario Aragon, who owns a consumer credit repair company in Springville. He’s seen an increase in people getting bad news when it comes to mortgages.

“We’ve had a lot of people telling us that they were ready to purchase, and now, because of the home value going up so much and interest rates going up that high, their income is not helping them get approve for that particular loan,” said Aragon with Precision Credit Solutions.

Aragon said with credit card usage increasing, families need to smartly manage their debt. Those encountering debt trouble should focus on three things.

“The first thing is to try to limit what you spend,” he said.

Second, make sure you pay at least your minimum payments each month to avoid fees and penalty interest rates. Finally, if you can’t pay the minimum he recommends calling the credit card company and asking for a payment plan with a lower interest rate.

“You can actually talk to them and explain your situation,” Aragon said. “Say, ‘Hey, I’m overwhelmed. I can’t cover my credit card debt. How can you help?’”

For those with good credit, Aragon said now is a good time to transfer credit card balances to low, promotional interest rates.


The-CNN-Wire™ & © 2022 Cable News Network, Inc., a Warner Bros. Discovery Company. All rights reserved.

KSL TV’s Ladd Egan contributed to this report.

KSL 5 TV Live

National News

An artist's illustration depicts Voyager 1 as it travels through interstellar space, or the space b...

Ashley Strickland, CNN

Voyager 1 is sending data back to Earth for the first time in 5 months

For the first time in five months, NASA engineers have received decipherable data from Voyager 1 after crafting a creative solution to fix a communication problem aboard humanity’s most distant spacecraft in the cosmos.

5 hours ago

WASHINGTON - APRIL 14:  Activists line Wisconsin Avenue during a vigil outside the residence of Vic...

Matthew Barakat, Associated Press

Jury deliberating in Iraq Abu Ghraib prison abuse civil case; contractor casts blame on Army

A lawyer for a military contractor being sued by three survivors of the notorious Abu Ghraib prison in Iraq says the plaintiffs are suing the wrong people.

7 hours ago

This image provided by the Topeka Zoo shows Karen, an ostrich at the Topeka Zoo in Topeka, Kan. The...

Associated Press

An adored ostrich at a Kansas zoo has died after swallowing a staff member’s keys

A beloved ostrich at the Topeka Zoo & Conservation Center in Kansas has died after swallowing a staff member's keys.

7 hours ago

Layton Utah temple photo show with others in Utah announced at West Jordan and Lehi...

KSL TV

Three temple locations, including West Jordan and Lehi, announced

Today, the locations for three temples — two in Utah, West Jordan and Lehi, and one in Florida — were announced.

7 hours ago

Some of Taylor Swift's most beloved songs are heart breaking -- and that can be helpful, experts sa...

Madeline Holcombe, CNN

Why everyone is crying to Taylor’s breakup songs

Fans were waiting with bated breath for the emotional torment they were sure would come from “The Tortured Poets Department,” Taylor Swift’s 11th studio album.

8 hours ago

FILE: A Brightline train is seen at the new MiamiCentral terminal during the inaugural trip from Mi...

Ken Ritter

Work starts on bullet train rail line from Sin City to the City of Angels

A $12 billion high-speed passenger rail line between Las Vegas and the Los Angeles area has started construction.

9 hours ago

Sponsored Articles

Women hold card for scanning key card to access Photocopier Security system concept...

Les Olson

Why Printer Security Should Be Top of Mind for Your Business

Connected printers have vulnerable endpoints that are an easy target for cyber thieves. Protect your business with these tips.

Modern chandelier hanging from a white slanted ceiling with windows in the backgruond...

Lighting Design

Light Up Your Home With These Top Lighting Trends for 2024

Check out the latest lighting design trends for 2024 and tips on how you can incorporate them into your home.

Technician woman fixing hardware of desktop computer. Close up....

PC Laptops

Tips for Hassle-Free Computer Repairs

Experiencing a glitch in your computer can be frustrating, but with these tips you can have your computer repaired without the stress.

Close up of finger on keyboard button with number 11 logo...

PC Laptops

7 Reasons Why You Should Upgrade Your Laptop to Windows 11

Explore the benefits of upgrading to Windows 11 for a smoother, more secure, and feature-packed computing experience.

Stylish room interior with beautiful Christmas tree and decorative fireplace...

Lighting Design

Create a Festive Home with Our Easy-to-Follow Holiday Prep Guide

Get ready for festive celebrations! Discover expert tips to prepare your home for the holidays, creating a warm and welcoming atmosphere for unforgettable moments.

Battery low message on mobile device screen. Internet and technology concept...

PC Laptops

9 Tips to Get More Power Out of Your Laptop Battery

Get more power out of your laptop battery and help it last longer by implementing some of these tips from our guide.

The Fed makes history with 4th straight three-quarters-point rate hike