Fed Rate Hike Looms as Inflation Hits 3.4 Percent

The Federal Reserve is set to raise its short-term interest rate on Wednesday for the first time in three years, as inflation continues to rise. The consumer price index has reached an annual inflation rate of 3.4 percent in August, with higher oil and gas prices due to the war with Iran contributing significantly.

Despite President Donald Trump's demand that the Fed cut rates, markets see a 90 percent chance of a quarter-point increase in the interest rate from 3.6 percent. This hike is expected to affect various financial products used by consumers daily, including credit cards and car loans.

Mortgages will likely become more expensive for consumers, with 30-year mortgage rates currently above 6.709 percent and predicted to remain around this level through the end of the year. The higher interest rates have helped stall the housing market as people pay more for their homes in the long run.

Savings accounts, on the other hand, may see better returns with high-yield savings accounts offering mostly 3 percent rates, occasionally reaching 4 percent yields. Credit card rates will also rise once the Fed moves to raise rates, potentially to record highs, according to Mark Zandi, a chief economist at Moody's.