Headline RoundupFebruary 1st, 2023

Federal Reserve Announces Quarter-Point Interest Rate Hike

AllSides Summary

The Federal Reserve announced another interest rate hike on Wednesday as it continues its efforts to curb inflation.

Details: The latest increase to the federal interest rate is the eight hike since March 2022. This increase was milder compared to previous hikes, with the rate only going up a quarter-point.

What Does This Mean? An article published in SoFi Learn describes the federal interest rate as the “rate at which banks charge each other for loans borrowed or lent overnight.” When the federal interest rate is high, credit and loans are more expensive, resulting in less economic growth. The Federal Reserve is operating under the thought that inflation can be lowered by slowing down economic activity, so by raising the interest rate, they are intentionally reducing economic activity in an effort to bring down prices.

Key Quotes: Commenting on economic data indicating inflation was decreasing, Federal Reserve Chair Jerome Powell told reporters, “we will need substantially more evidence to be confident that inflation is on a long, sustained downward path. It would be very premature to declare victory or think that we really got this. We have to complete the job.”

How The Media Covered It: Fox News stated that a “growing number of Wall Street economists anticipate the Fed's actions will tip the economy into a recession next year.” The Associated Press report echoed this, stating that the rate hike “will likely further raise the costs of many consumer and business loans and the risk of a recession.”

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