The new 75 Hard: forget fitness, we’re combating inflation

Following the conclusion of its two-day meeting yesterday afternoon, the Federal Reserve’s policy board voted unanimously to raise interest rates by 0.75% for the second straight month.

🏦 More deets… After four rate hikes in a row, America’s benchmark short-term interest rate currently sits in the 2.25% to 2.5% range, the highest it's been since 2019.

• Jerome Powell’s the name, and fighting inflation is the game: the Fed Chair said the recent hikes are intended to combat inflation, which surged to a 40-year high last month (+9.1% compared to 2021).
• 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.

📈 The market reacts: All three major US indexes finished higher on the day, after spiking at least one percentage point in the ten minutes after the Fed announced its rate hike. (Dow: +1.4% | S&P: +2.6% | Nasdaq: +4.1%)

👀 Looking ahead… Fed officials last month said they expect to raise the benchmark interest rate to the mid-3% range by the end of this year. Its next two policy meetings are scheduled for September 20-21 and November 1-2.

+Could it be?... The federal gov’t is set to report Q2 GDP numbers later this morning. If they’re negative, it would mean the US economy has officially entered into a technical recession, aka two consecutive quarters of GDP decline. (See a fuller definition here.)