![]() Higher interest rates generally lead to higher returns on savings and certificates of deposit. What the rate hike pause could mean for you Lowering inflation will take time, and keeping the economy in balance means looking at the bigger picture over the long term. But that still might not be enough to data for the central bank to determine where rates will go next. More official reports measuring inflation and unemployment will be released between next week’s FOMC and the subsequent Fed meeting in November. “However, if they underestimate inflation, it will lead to a resurgence in prices that surpass wage gains and ultimately result in job loss and wage erosion,” Sprehe said. But if the Fed presses pause this month, it might achieve what’s called a “soft landing,” which would slow the economy just enough and avoid the consequences of a severe economic downturn. “If they overshoot, then we are thrown into a mild recession,” said Phillip Sprehe, an economist at Geographic Solutions. ![]() Holding rates steady this month gives the Fed more time to carefully decide what happens next. Fed officials will be reviewing the data regularly to see if rate hikes are necessary to bring annual price growth down to that level. Inflation is now at 3.7% year over year, which is still above the Fed’s target rate of 2%. ![]() When the Fed pauses, or “skips,” a rate hike, it’s another way of saying that it reserves the right to take necessary steps in the future depending on market conditions, according to Shayowitz. There’s a chance that the Fed could “skip” rate hikes this month, said Shmuel Shayowitz, chief lending officer at Approved Funding. Higher interest rates affect spending, borrowing, investing and the housing and bond markets. In March of last year, it was 0.25% to 0.50%. The current federal funds rate range now sits at 5.25% to 5.50%. The Fed could pause raising rates this month
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