Federal reserve raises interest rates: Impact on inflation and access to credit

Steven

Hey Stephany, did you see that the Federal Reserve raised interest rates to the highest level in 22 years?

Stephany

Yes, it's quite significant. The Fed has been fighting inflation, and this move shows their commitment to bringing it back down to their 2% goal.

Steven

Absolutely. The Fed's chairman, Jerome Powell, mentioned that they are closely monitoring the economic data and that there might be more interest rate increases in the future if the data warrants it.

Stephany

That's true, but I also noticed that US inflation has been declining for the past 12 months and is currently running at 3%. Some officials are concerned that the recent slowdown in price rises may be temporary.

Steven

Yes, Fed governor Christopher Waller mentioned that while the last inflation report was encouraging, they need to make policy decisions based on more than just one data point.

Stephany

It's interesting how the rate rises have affected other areas, like mortgage rates and car loan prices. The average long-term US mortgage rate climbed to just under 7%, the highest level since November.

Steven

Rising rates are making it more difficult for Americans to obtain credit. The rejection rate for credit applicants increased to 21.8%, the highest level since June 2018.

Stephany

It's definitely a challenging situation. On one hand, the Fed wants to control inflation, but on the other hand, it's impacting people's ability to access credit.

Steven

Exactly. It's a delicate balance. I wonder how this will affect the overall economy in the long run.

Stephany

Well, we'll have to wait and see. The Fed will continue to assess the data and make decisions meeting by meeting. It's definitely something to keep an eye on.

Stephany

I have to go. I must finish an article for tomorrow's deadline. Talk to you later!

Steven

No problem, Stephany. Good luck with your article. Let's catch up again soon.