The Federal Reserve provided the struggle against inflation this week and announced that this year the interest rate is at its highest in the last 30 years. They explain this by the work of the central bank that tries to recover authority over skyrocketing consumer prices.
According to recent studies, the Fed expanded its standard interest rate by 0.75%, which is considered to be the largest increase since the beginning of 1995. These results were followed by an increase of 0.25% in March, and a subsequent 0.5% growth in May.
Many analysts who specialize in the comparison of consumer loans have predicted another growth for the upcoming month, given the results of the previous months. However, policymakers proceeded to a more assertive and bold action after a statement that was published at the beginning of the month. This report has shown that inflation was even stronger than experts forecasted.
According to the statistics, the consumer rates increased by over 9% in comparison to the same period of the previous year. This is why people start to apply for more consumer loans in various companies, such as Ferratum. This kind of growth mirrors not only increasing prices for gas and food but also reflects on rental charges and plane tickets and an extensive array of other services. Many economists and analysts claim that inflation becomes more ingrained, and cannot be avoided. Ever since these changes, people have noticed significant changes in their day-to-day lives.
The increase in temporary economic decline brings worries and concerns.
The central banking system of the USA has increased the consumer interest rates, hoping to reduce the levels of the customer market, which has dominated store and gas expenses. More increased prices will create more costly circumstances to hold a credit, get an automobile, or purchase a place. More heightened borrowing expenses are also considered for a financial boost. Stock markets have decreased in the last couple of months due to the worries that this kind of action made by the Fed could tilt the economy into a slump.
However, many specialists have shown a forecast of the growth of the economy by 2% by the end of the year. Considering that a few months ago they predicted an increase of around 3%, we need to wait a few more months to see the final results. They also claim that by the year 2023 the increase will slowly wind down, and the inflation will fall without any slump. There might be some highs and lows on the way. However, consumers will surely notice a slower pace of growth in the forthcoming year. The experts also assume that the unemployment percentage will also increase next year, reaching 4% from the current 3.5%.
Experts predict more increased rates in the future
Increasing expenses have started carrying a toll on retail deals, which dropped by 0.5% this month. Many experts have noticed a decline in spending on various things, including electronics, household appliances, furniture, etc. This year, people started to spend more money on gas and food, considering the dramatic increase in the rates. And many analysts still predict even more increases in prices in the upcoming months. They foresee the rates to grow around 4% by the end of 2022, which is almost twice as high as it was in Q1 of 2022.
People who were interested in buying homes started to refuse as the rates have dramatically grown. The loan rates for homes have almost doubled from the previous year, reaching around 6%. Many analysts say that the rates will go even higher, reaching their highest prices in many decades. This situation will lead the housing question to become in the red zone instead of the yellow one. Many experts see a decrease in household sales when checking the Q1 and Q2 of 2022.
The bottom line
Considering the situation all over the world and overall inflation, people will see an increase in consumer rates in the upcoming years. However, many specialists are full of hope that the crisis will wind down as changes will be applied by the Federal Reserve System. The final results and the statistics of 2022 will be published at the end of the year, and we will have the full picture of the consumer interest changes of this year.