This is what the Fed’s interest rate hike means for you: Average mortgage payments will spike by more than $200 and buying a car or carrying a credit card balance will also hit you in the pocket – but savings accounts could offer returns of 2.4%

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  The Federal Reserve pushed interest rates up by another 0.75 percentage points on Wednesday, the fourth-consecutive time this year after American’s enjoyed rates at nearly 0 percent throughout the pandemic 
• The rate hike is expected to cause interest rates on mortgages, credit cards and all types of loans to go up, causing monthly bill payments to soar and hurting American’s ability to repay their debts 
• While interest on savings will also see a small increase as high as 2.4 percent, it would do little to relieve consumers amid the rise in cost of living, which remains high at 8.2 percent
• The Fed is projected to implement another hike in December to reach a benchmark of 4.6 percent

By RONNY REYES FOR DAILYMAIL.COM

Americans are going to see yet another blow to their wallets after the Federal Reserve raised interest rates by 0.75 percentage points for the fourth-time in a row on Wednesday. 

The central bank has acted aggressively in bumping interest rates this year after leaving them at near zero through the pandemic, with the Fed hoping the rate hikes will quell inflation, which remains high at 8.6 percent. 

The Fed’s main tool to fight inflation is by setting the short-term borrowing rate for commercial banks, which then pass that rate on to consumers and businesses, thus cooling the economy and easing the cost of living. 

While inflation may go down, American’s loan payments are expected to surge, with mortgage rates hitting 7.16 percent last week, well above the rates seen just before the 2008 Great Recession. 

Interest rates for auto loans and credit cars are also expected to soar, making it even harder for the average American to claw their way out of debt. 

Savers, however, may see some benefits as their returns increase with the raising interest rates, with consumers able to shop for return rates as high as 2.4 percent. +13View gallery

The Fed’s latest hike is expect to cause borrowing rates and the monthly cost to pay back debt to further surge. The hike, however, typically brings in better savings offers from banks+13View gallery

The Federal Reserve pushed interest rates up by another 0.75 percentage points on Wednesday, the fourth-consecutive time this year after American’s enjoyed rates at nearly 0 percent throughout the pandemic 

On Wednesday, the central bank bumped interest rates from 3.25 percent to 4 percent, it’s fourth 0.75 percentage point hike in five months and the biggest rate hike in 28 years.   

The Fed’s policymakers signaled that they expect to boost their key rate up to at least 4.6 percent by the end of the year, suggesting at least another 0.6 percent hike in December. 

Fed Chair Jerome Powell noted, however, that no decision has been made yet. He hopes that by making borrowing gradually more expensive, the central bank will succeed in cooling demand for homes, cars and other goods and services, thereby slowing inflation. 

‘My colleagues and I are strongly committed to bring inflation down to our 2 percent goal,’ he said on Wednesday. ‘We will stay the course until the job is done.’ 

Powell said he stands by the Fed’s hikes, saying he doesn’t believe the central bank has ‘overtightened’ or ‘moved too fast,’ and that their work will see inflation fall.

‘It will take time, however, for the full effects of monetary restraint to be realized, especially on inflation,’ he said.

Experts, however, warn that the aggressive push will send the US economy into a full recession, with many analyst forecasting the economic crisis by 2023. 

Powell insisted that the Fed needs to remain aggressive in order to avoid entrenched inflation, suggesting that the central bank has no intent on slowing down hikes. 

‘It is very premature to think about pausing,’ Powell said. 

The Fed chair ultimately noted that while the path to a soft economic landing has ‘narrowed,’ it was ‘still possible.’ 

‘We’ve always said it was going to be difficult, but to the extent rates have to go higher and stay higher for longer it becomes harder to see the path,’ he said. ‘I would say the path has narrowed over the course of the last year.’

WILL THE NEW RATE MAKE IT MORE EXPENSIVE TO BUY A HOME?

One of the sectors the Fed has been watching closely is the interest-rate sensitive housing market, which has begun to cool off as interest rates soared past 7 percent last week. 

With the 30-year mortgage rate sitting at 7.16 percent, the average person trying to purchase a $400,000 home with a down payment of $10,000 would be stick with a monthly payment of $2,9650, up $225 from September’s estimate. 

That mortgage payment will likely see a greater spike should the Fed’s latest hike bump mortgage rates further as the US median price for a home during the third fiscal quarter rose to nearly $455,000. ……..more here

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