Federal Reserve Hikes Rates Amidst Higher-Priced Economy

The Federal Reserve's recent interest rate hike marks a significant shift in the economy from one of low inflation and slow growth to a higher-priced, higher-rate world.

Economists point out that despite repeated shocks, including the Iran war driving up oil prices, the economy is growing steadily and may even be accelerating. Meanwhile, stubbornly high inflation persists, with the average 30-year mortgage rate reaching 6.95 per cent last week, its highest level in over a year and a half.

According to Joe Brusuelas, chief economist at RSM, this change is due to a shift from the pre-pandemic economy where consumer and business demand was weak, to the current economy where healthy spending is colliding with supply shocks and bottlenecks.