The Federal Reserve is poised on Wednesday to raise interest rates for the sixth time this year.

Live updates on expected rate hike

  • The Fed is poised on Wednesday to raise interest rates for the sixth time this year.
  • The hike will make it more expensive for consumers and businesses to borrow money.
  • The central bank is boosting rates to curb inflation, which hovers near a 40-year high. But the higher rates risk pushing the economy into a recession.
  • The Federal Reserve is poised on Wednesday to raise interest rates for the sixth time this year. That increase will have a direct impact on consumers’ wallets, making it even more expensive for them to get a mortgage and pay off credit card debt.

    The central bank is boosting rates to curb inflation, which hovers near a 40-year high. September’s consumer price index report showed that annual inflation fell slightly to 8.2% but rose by 0.4% on a monthly basis, exceeding economists’ expectations. 

    The Fed faces growing calls from lawmakers as well at the United Nations to stop hiking rates over concerns that it could ignite a painful recession. But it hasn’t signaled it will hit the pause button time any time soon, as it aims to bring inflation closer to its 2% target, even if it causes job losses.

    For now, at least, the labor market remains strong. Job openings are plentiful and unemployment is remarkably low. But economists don’t expect that to be the case in 2023, especially if the Fed continues lifting rates at an aggressive pace. If today’s hike comes in as expected – 75 basis points – it would mark the fourth straight increase at that high level.

    Follow along for our coverage of today’s crucial interest rate decision:

    What time is the Fed rate hike decision?

    The Fed’s decision is announced at 2 p.m. ET on Wednesday.

    — Elisabeth Buchwald

    What time does Powell speak today?

    Fed Chairman Jerome Powell’s media conference will begin at 2:30 p.m. ET on Wednesday. USA TODAY economics reporter Paul Davidson will cover the event in person.

    — Elisabeth Buchwald 

    What is the Federal Reserve system?

    Ahead of the rate hike, it’s a great time to revisit what the Federal Reserve system is.

    We often associate the Fed with Powell and the building located in Washington, D.C., but the Fed extends well beyond that. There are 12 regional banks located in Boston, New York, Philadelphia, Cleveland, Richmond, Atlanta, Chicago, St. Louis, Minneapolis, Kansas City, Dallas and San Francisco. Each bank has its own president.

    There are 12 people responsible for deciding what to do with interest rates at every Fed meeting. Seven seats are filled by the Federal Reserve’s Board of Governors which includes Chairman Powell and six other people who were nominated by the President and confirmed by the Senate. The New York Fed president casts a vote on interest rates at every meeting. The remaining four votes come from a rotating cast of the other regional bank leaders.

    — Elisabeth Buchwald

    What are current mortgage rates?

    The current mortgage rates have eclipsed 7% for the first time in more than two decades leaving some Americans wondering whether to buy a home in this ever-changing housing market.

    “Nobody saw this coming. We thought maybe a max of 5%, but not a 7% interest rate,” Nadia Evangelou, a senior economist and director of forecasting for the National Association of Realtors told USA TODAY. As a result, Evangelou said the realtors association has readjusted its forecast several times this year.  

    The current 30-year fixed-rate mortgage on Tuesday is 7.22%, a decrease of 8 basis points from a week ago, according to Bankrate.com. Bankrate said that the existing 15-year fixed-rate mortgage is 6.47%, a 3 basis points increase from last week. 

    The average on an adjustable-rate mortgage is 5.53%, up 5 basis points from the same time last week. An adjustable-rate mortgage is a home loan with an interest rate that can fluctuate over time.

    — Terry Collins

    Are we in a recession right now?

    While two consecutive GDP contractions in the first two quarters this year met an informal benchmark for recession, the National Bureau of Economic Research looks at a broader range of economic activity, including employment, retail sales and industrial production, before determining when a downturn begins and ends. NBER is a non-profit, non-partisan organization that frequently publishes economic research. Within NBER is a team of eight economists tasked with determining when recessions occur. 

    Most economists don’t believe the U.S. is in a recession, citing slowing but still-vibrant job growth. There’s little doubt, though, that the economy is losing steam as households and businesses curtail spending amid soaring inflation and the Federal Reserve’s aggressive interest rate hikes aimed at tempering the price increases.

    — Paul Davidson 

    How to prepare for a recession

    That said, it’s never too early to start thinking about how to prepare for a recession. 

    Try to put aside just enough so you can scrape by on a strictly bare-bones budget for three months in case you lose your job, said Brian Robinson, a financial adviser and partner with SharpePoint.

    Also, consider putting off “nice to have” purchases. For instance, if your refrigerator breaks, get it repaired or buy a new one. But if the blow dryer you’ve owned for five years still gets the job done, just not as good as a newer one, hold on to it – and your cash.

    Make sure to take inventory of all your monthly subscriptions and ask yourself which you could live without, then cancel those. 

    — Elisabeth Buchwald

    Federal Reserve meeting schedule 

    The Fed’s last meeting of the year will take place from December 13-14. Then the central bank will reconvene on January 31 for its two-day meeting. Here is the schedule of meetings for the rest of 2023:

  • March 21-22 
  • May 2-3
  • June 13-14
  • July 25-26
  • September 19-20
  • October 31-November 1
  • December 12-13
  • — Elisabeth Buchwald

    I bonds interest rate

    The Treasury announced Tuesday that the rate on its inflation-protected I Bonds will fall to an annual rate of 6.89% for the next six months. Anyone can invest a minimum of $25 or a maximum of $10,000 each year. 

    — Jim Sergent 

    Fed fund rates today 

    Ahead of the Fed’s upcoming rate hike, the fed fund rate ranges between 3% to 3.75%. A 75 basis point hike would push the range between 3.75% to 4%. The fed funds rate is the interest rate banks charge to lend money to one another. 

    — Elisabeth Buchwald

    How does raising interest rates help inflation?

    Rising rates increase consumer and business borrowing costs, which reduces demand for products and services broadly, leading suppliers to cut prices or stop raising them. But the immediate effect varies significantly across individual goods and services.

    — Elisabeth Buchwald and Paul Davidson 

    Stock market today

    Stocks opened lower ahead of the Fed’s decision. The Dow Jones Industrial Average was down by 0.3% while the S&P 500 was down by 0.7% and the Nasdaq was down by 1.3% as of 12:30  p.m. ET. 

    — Elisabeth Buchwald

    S&P 500 performance during the past five rate hikes

    In all but one of the past five Fed rate hikes, the S&P 500 closed at least 1% higher. The most recent hike, which occurred in late September, was the exception. Leading up to the decision, the index was higher but fell immediately after the Fed announced the 75-point hike. In the final trading hours, the S&P 500 seesawed between positive and negative territory multiple times. 

    — Jim Sergent 

    Federal Reserve rate hike history 2022

    Here’s when the Federal Reserve hiked its short-term interest rate this year, and the amount by which it raised that rate.

  • March 17: 0.25 percentage point
  • May 5: 0.50 percentage point
  • June 16: 0.75 percentage point
  • July 28: 0.75 percentage point
  • September 22: 0.75 percentage point
  • — Paul Davidson

    What is inflation?:Understanding why prices rise, what causes it and who it hurts most.

    What is a recession?:The economic concept explained and what happens during one.

    What does it mean when the Federal Reserve raises interest rates?

    When the Fed raises interest rates it becomes more expensive for banks to borrow money from one another. Banks pass on these higher rates to consumers by making it more expensive for them to get a mortgage, a loan, pay off credit card debt and more.

    On the flip side, Fed rate hikes increase the interest you earn on money in a savings account.

    — Orlando Mayorquin

    How will stock react to the Fed?:Here’s how the stock market has moved with all 5 of the Fed interest rate increases

    I Bond rates:Why I chose I Bonds to protect my sons’ inheritance from 40-year-high inflation

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