(NewsNation) — The Federal Reserve is set to announce a decision about interest rates after meeting on Wednesday.
The Fed is expected to raise interest rates again in an ongoing effort to combat inflation, even as a recent report showed inflation slowing. The Fed is projected to raise interest rates by a half point, a smaller increase than previous rate hikes. At the same time, the agency is expected to signal an intent to continue to raise rates in the coming year.
The six rate hikes the Fed has already imposed this year have raised its key short-term rate to a range of 3.75% to 4%, its highest level in 15 years. Cumulatively, the hikes have led to much costlier borrowing rates for consumers as well as companies, ranging from mortgages to auto and business loans. Worries have grown that the Fed is raising rates so much in its drive to curb inflation that it will trigger a recession next year.
The more interest rates rise, the more consumers will find themselves paying if they take out a new mortgage or car loan. And for those who carry a balance on credit cards, where rates fluctuate with the economy, those debts will accrue interest more quickly, too.
In order to curb inflation, the Fed’s policies could also change the outlook for job seekers and workers. The Fed has already stated an intention to slow the job market to curb inflation, with the hope of reducing wage growth, which has been growing 5-6 percent per year to a growth rate around 3.5 percent, just above the inflation goal of 2 percent.
How the Fed will slow a robust labor market to help bring down inflation could prove perilous. Chair Jerome Powell and other Fed officials have said they hope their rate hikes will slow consumer spending and job growth. Businesses would then remove many of their job openings, easing the demand for labor. With less competition for workers, wages could begin to grow more slowly.
In addition to rate hikes, the Fed is expected to forecast economic expectations for 2023, indicating if they see a potential for more layoffs and a possible recession in the coming year.
The Associated Press contributed to this report.