With the recent announcement on the Consumer Price Index reaching 8.6%, News5 would like to know where you are seeing the biggest impact?
Results:
59% Gas
35% Groceries
4% Housing
2% Utilities
We're following this survey throughout the day and into tomorrow. Tune in to News5 at 4 p.m. as we review the results!
Editor's note: This survey is not based on scientific, representative samples and is solely for KOAA purposes.
Surging inflation clears way for biggest fed hike in years
The Federal Reserve is expected Wednesday afternoon to announce its largest interest rate hike since 1994 — a bigger increase than it had previously signaled and a sign that the central bank is struggling to restrain stubbornly high inflation.
The central bank is likely to raise its short-term benchmark rate by three-quarters of a percentage point, far larger than the typical quarter-point increase, to a range of 1.5% to 1.75%. It will also likely forecast additional large rate hikes through the end of the year.
Sizable increases would heighten borrowing costs for consumers and businesses, likely leading to an economic slowdown and raising the risk of a recession. The Fed's previous rate hikes have increased mortgage rates roughly 2 percentage points since the year began and have slowed home sales.
Other central banks worldwide are also acting swiftly to try to quell surging inflation, even with their nations at greater risk of recession than the U.S. The European Central Bank is expected to raise rates by a quarter-point in July, its first increase in 11 years. It could announce a larger hike in September if record-high inflation levels persist. On Wednesday, the ECB vowed to create a market backstop that could buffer member countries against financial turmoil that erupted during a debt crisis more than a decade ago.
The global efforts to tighten credit are escalating the risk of a severe downturn in the United States, Europe and elsewhere. Last week, the World Bank warned of the threat of “stagflation” — slow growth accompanied by high inflation — around the world.
By the end of 2022, the Fed will have raised its key rate as high as a range of 3.25% to 3.5%, some economists estimate, higher than what was forecast just a few weeks ago. At that level, the rate would likely be well above “neutral,” meaning at a level that would be intended to slow growth. In March, the Fed had forecast that it would raise rates only to a range of 1.75% to 2% by year's end.
Expectations for larger Fed hikes have sent a range of interest rates to their highest points in years. The yield on the 2-year Treasury note, a benchmark for corporate bonds, has jumped to 3.3%, its highest level since 2007. The 10-year Treasury yield, affecting mortgage rates, has reached 3.4%, up nearly a half-point since last week and the highest level since 2011.
After the Fed's last meeting in May, when it raised its benchmark rate by a half-point, Chair Jerome Powell said that similar increases were “on the table” for the central bank's June and July meetings, should the economy “evolve in line with expectations.”
Additional reporting by The Associated Press.
___
Watch KOAA News5 on your time, anytime with our free streaming app available for your Roku, FireTV, AppleTV and Android TV. Just search KOAA News5, download and start watching.
