Fed Raises Interest Rates Amid Ongoing Iran War-Driven Inflation

The U.S. Federal Reserve has raised interest rates by a quarter of a percentage point to 4%, from 3.75%. This decision will impact Americans with debt, increasing minimum payments on credit cards and personal loans, making it more expensive to buy a house or car.

According to Dean Stansel, research associate professor at the SMU Cox School of Business, inflation has been above the Fed's 2% target for over five years. He attributes this partly to the ongoing Iran War, which has led to a nearly 50% increase in gas prices since its start.

The Fed's goal is to bring down costs by raising interest rates. Stansel says an interest rate hike will lead consumers to cut back on spending as they pay more towards their debts, resulting in a slowdown in economic growth.