Interest rates keep going up

The Federal Reserve approved a 0.75% increase in interest rates on Wednesday, the largest single bump since 1994. The benchmark funds rate is now 1.5–1.75%, the highest it's been at any point during the pandemic, after starting the year at near-zero.

🏦 More deets... Fed Chair Jerome Powell said the central bank expects to raise rates by another 0.5–0.75% after its next meeting in July in an effort to tame inflation, which increased at its highest annual rate in over four decades last month.

• The decision to continue raising interest rates affects borrowing costs throughout the entire US economy. You can expect to see higher rates on mortgages, credit cards, student loans, saving accounts, corporate debt and more; how much those rates increase will depend on how investors, businesses and households respond.
• Case in point: the average 30-year fixed mortgage rate has risen over three-quarters of a percentage point since last week, reaching 6.28% on Tuesday after starting the year at 3.25%, per Mortgage News Daily.

👀 Looking ahead... The Fed is expected to raise rates four more times, forecasting a range of 3.25% to 3.5% by the end of the year, which would be highest since 2008.

🧠 In the know: Higher interest rates usually lead to slower (or negative) growth for stocks because it reduces the value investors place on their future earnings. Generally speaking, fixed-income assets like bonds gain a boost in attractiveness compared to riskier assets like stocks.

+Dig deeper: What exactly is the role of the Federal Reserve?