Last week the Federal Reserve raised interest rates by 0.50%, the largest rate hike in more than two decades. At a press conference shortly after announcing the move, Fed Chairman Jerome Powell indicated that the Central Bank is considering additional .50% rate hikes in the coming months.
The Fed’s increasingly hawkish posture speaks to the seriousness of the inflation crisis gripping the American economy. And though these rapid and substantial rate hikes are necessary to curb rising prices, they do come at a cost. Higher rates and less liquidity have historically dampened economic growth.
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