Understanding the pros and cons of the Fed's rate hike

It could bring down inflation — or tip the economy into recession

Jerome Powell.
(Image credit: Illustrated | Getty Images, iStock)

The Federal Reserve is going on offense against inflation. Fed Chairman Jerome Powell on Wednesday announced the biggest interest rate hike in two decades, and experts expect the Fed to raise the rate even more in the coming months.

"The Fed's suite of policy changes underscored that the central bank is serious about cooling down the economy and the job market," The New York Times reports. "Officials have grown increasingly nervous that price increases, which have lasted longer than many economists had expected, could become more permanent." Here are some ways the rate hike could help or hurt the economy — and your wallet.

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