Two ways you can help slow inflation, and when there may be an end in sight
The federal reserve making another historic interest rate hike. On Wednesday, they approved their third consecutive increase of .75% as part of an effort to drive down record high inflation.
Posted — UpdatedHow did we get here?
There was an excess of money during the coronavirus pandemic, from stimulus checks to extended unemployment funds. Coupled with a diminished supply of goods and then soaring demand, we are now struggling with high inflation.
The average credit card rate is now at 18% and mortgages are at 6 %.
Home equity and car loans are all much higher than they were this time last year due to the rate hikes.
What is the federal reserve doing?
If the cost to borrow money new or the variable interest rates you currently have go up, you will have to pay more money on rates and have less spending money. The federal reserve hopes this will lead to shrinking demand.
When does this end?
On top of Wednesday's interest rate hike, the federal reserve is expected to continue to increase rates for the next few months.
The goal is to have a cooling effect on inflation.
Some fear this interest rate hike will trigger a recession because companies and consumers will have less money to spend and work with. However economist believe a recession will be short lived.
"I suspect by the end of next year, we are going to see a very stable economy coming up," said St. Augustine University economist Charles Ibeziako.
Two things you can do to fight inflation
- Don’t buy overpriced goods. That signals to companies that you aren't willing to pay that much for a good and it also lowers demand.
- Don’t panic buy. Doing this show companies that you are willing to pay high prices, and it shrinks supply.
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