The Federal Reserve just raised its target federal funds rate by half a point today. What does that mean for you and your money?
If you’ve been watching your 401(k) balance decrease over the past four months, today was a welcomed relief as the market had its best day since November 2020. Recent world events (that we’ll discuss in later blog posts!) have contributed to recent market downturns. Today’s news from our boy J-Pow was gladly welcomed on Wall Street and the red lines turned green.
Let’s explore why.
You probably also noticed that your gallon of oat milk and tank of gas costs significantly more now than it did just a year ago (we won’t even discuss how much your landlord wants to jack up rent). Well, you can thank inflation for that. Inflation skyrocketed to 8.5% in March, a level not seen since John Travolta had Saturday Night Fever (look it up, kids).
Life has gotten ridiculously expensive for the average American and The Federal Reserve is trying their best to keep the economy moving in a positive direction while controlling inflation. A misstep on their part could lead to a recession.
By increasing the federal funds rate, Americans will feel the effects. Here’s how:
There are a lot of wildcards still in play here. Russia’s invasion of Ukraine is still wreaking havoc in Europe. China’s Covid shutdowns are still causing supply chain issues. Hopefully no ships will get caught in the Suez Canal this year. Fingers crossed. Ultimately, there’s hope this fed rate hike will help bring down the living expenses of Americans and the economy growing.