The Fed is prepared to raise interest rates significantly once again. Who knows what will happen next?

On October 14, in Washington, DC, Federal Reserve Chair Jerome Powell attends a meeting of the International Monetary and Financial Committee. On Wednesday, Powell is anticipated to make another interest rate announcement.

via Getty Images, JIM WATSON/AFP As concerns arise about how much higher borrowing costs will have to go before obstinate inflation starts to decline, the Federal Reserve is anticipated to order another significant increase in interest rates on Wednesday.

Since March, the central bank has already has increased its benchmark interest rate by 3 percentage points, and this week’s meeting is expected to see another 3/4 of a point increase. Although it is the most aggressive series of rate increases in decades, little has been accomplished in terms of keeping prices in check thus far.

The rate of increase in interest rates has been “whiplash-inducing,” according to Greg McBride, chief financial analyst at Bankrate. Even once we start to see some improvement, it will take some time for inflation to decline from these high levels.

The annual inflation rate in September was 6.2%, according to the Fed’s preferred yardstick , remaining constant from the previous month. Even more quickly, at an annual rate of 8.2%, prices are rising according to the more widely recognized consumer price index.

None of the inflation barometers that the Fed examines, according to McBride, “is truly moving in the right way.”

The rate increase on Wednesday might be the final significant increase for a while. The markets will be watching for any indication that the Fed intends to reduce its December rate increase. But according to McBride, borrowing prices will probably need to stay high for a while in order to control inflation.

ECONOMY “Higher for longer” is the catchphrase for 2023, he declared. It will take some time when inflation has been running at 6, 7, or 8% while the aim is 2%.

Even if inflation remains unchecked, rate increases are still having an impact. The home market has already been severely impacted by higher borrowing costs. Additionally, other areas of the economy are starting to slow down. Consumers, meanwhile, who still have plenty of money they saved up before the outbreak, continue to spend. The Fed may have to apply the brakes more forcefully and for a longer period of time as a result.

According to Esther George, president of the Federal Reserve Bank of Kansas City, “we see today that there is a bit of a savings buffer still sitting for consumers, that may allow them to continue to spend in a way that maintains demand healthy.” That signals we might need to continue working on this for a while.

George has made it clear that she is committed to reducing inflation, just like her fellow members of the Fed’s rate-setting committee. However, she has also issued a warning against hiking rates too quickly at a period of economic uncertainty.

George stated last month, “I have been in the camp of steadier and slower rate hikes, to begin to see how those consequences from a lag will emerge. I was worried that a series of extremely large rate increases might cause you to oversteer and impair your ability to recognize those turning moments.

The Biden administration and the majority of Congress members have avoided interfering with the Fed’s efforts to control prices, despite polls suggesting that voters’ main concern is inflation. However, a few Democrats have started to criticize the central bank’s strategy, stating that aggressive rate increases could result in millions of people losing their jobs.

ECONOMY Sen. Elizabeth Warren, D-Mass., and colleagues wrote in a letter Monday to Fed chairman Jerome Powell : “We are gravely worried that your interest rate hikes run the risk of slowing the economy to a crawl while failing to halt increasing prices that continue to damage households.”

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