Fed Raises Benchmark Rate to 3.9%, Targets Inflation
The Federal Reserve has raised its benchmark interest rates for the first time since 2023 in an effort to combat inflation. The quarter-point increase brings the Fed's key rate to about 3.9%, which could result in higher borrowing costs for credit cards, mortgages, and auto loans over time.
According to Kevin Warsh, chairman of the Fed, 'plain fact: inflation is too high and has been for too long.' This decision may have negative consequences for mortgage rates and housing, as stated by Anthony Lamacchia, owner, founder, and CEO of Lamacchia Realty. However, Lamacchia does not blame the Fed for taking this action.
Financial advisor Michael Armstrong noted that the main goal of the announcement was to signal the Fed's commitment to controlling inflation. He believes that if you have a home equity line of credit or are paying interest on a credit card or buying a short-term CD or money market account, your interest rates may increase slightly.