Interest rates are going up, up, up

Trilogies are all the rage these days – and not just in Hollywood. The Federal Reserve’s policy-making committee announced its third consecutive rate hike of 0.75% yesterday. Before June, the Fed hadn’t raised rates by that much at a single time since 1994.

⏩ Driving the move… Yet another trilogy: Inflation, inflation, inflation. In a press conference following the announcement, Fed Chair Jerome Powell said US prices have remained elevated despite the central bank’s expectation that they’d be falling by this point.

• Powell also reiterated the Fed’s commitment to bringing annual inflation down to 2% (it’s currently 8.3%).

👀 Looking ahead… Officials indicated they plan to raise interest rates by at least another 1.25 percentage points by the end of this year. There are two remaining committee meetings.

📉📈📉 The market reacts… All three major US indexes seesawed in the two-and-a-half hours following the Fed’s rate announcement, before closing down across the board. (Dow: -1.7% | S&P: -1.7% | Nasdaq: -1.8%)

+In the know: The decision to continue raising interest rates affects borrowing costs throughout the entire US economy. You can expect to keep seeing 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.