What the latest Fed rate hike means for the economy

Federal Reserve
(Image credit: SAUL LOEB/AFP via Getty Images)

The Federal Reserve has announced that it will raise interest rates another 0.5 percent to 4.5 percent, marking the seventh increase of 2022. This will, however, be the smallest of the last four rate hikes showing promise that the increases will slow soon.

The increase comes following the latest consumer price index report showing that inflation cooled in November. Along with the rate increase, the Fed also announced economic predictions indicating that rates will likely need to go higher to slow the economy even more, writes The New York Times. It currently predicts rates will rise to 5.1 percent by the end of next year. Unemployment is likely to increase as well.

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Devika Rao, The Week US

 Devika Rao has worked as a staff writer at The Week since 2022, covering science, the environment, climate and business. She previously worked as a policy associate for a nonprofit organization advocating for environmental action from a business perspective.