What the Fed’s fight against inflation is already doing to the economy

What the Fed’s fight against inflation is already doing to the economy

Over the previous six months, mortgage rates have doubled. More than at any other time in more than a decade, consumers are paying more to use credit lines. As they prepare for a flood of corporate defaults, lenders are laying money away. Layoffs are also gradually increasing.

Fears that the United States is about to enter another recession just two years after emerging from the previous one have been raised as the Federal Reserve gets ready to implement another supersized interest rate hike on Wednesday. This is because the Federal Reserve’s campaign to combat inflation is already tearing through the economy, slowing down business activity.

The Fed is just getting started in trying to rein in the worst spike in prices in four decades. Yet the moves it has made to squeeze growth so far — combined with investor expectations that it will go even further — are having the desired effect now.

People are preparing for the storm, according to Som-lok Leung, executive director of the organisation that represents lenders, the International Association of Credit Portfolio Managers.

Here is a summary of some of the effects of the Fed’s activities and the direction we are going:

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