What another interest rate hike means for Americans
What another interest rate hike means for Americans
The Federal Reserve is expected to raise interest rates again Wednesday afternoon after pausing in June. CBS News business analyst Jill Schlesinger discusses how this hike will affect Americans.
#news #interestrates #economy
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Content
2.34 -> foreign
5.779 -> the Federal Reserve is expected to raise
8.28 -> interest rates again today after pausing
10.74 -> more than a year of rate hikes last
13.139 -> month experts believe the central bank
15.179 -> will increase rates by one quarter of a
17.699 -> percentage point point rather as part of
19.8 -> its ongoing fight against High inflation
21.779 -> the Bureau of Labor Statistics reported
24.84 -> this month that the consumer prices uh
27.119 -> dropped to three percent in June that's
29.82 -> still one percent above the Federal
31.679 -> reserve's target rate CBS News business
34.559 -> analyst Jill Schlessinger is joining me
36.18 -> now though to talk about what this all
37.98 -> means
39.26 -> we're doing it like it's almost at two
41.879 -> percent I know but two to three is big
44.1 -> great progress 9.1 percent in the CPI
47.579 -> index that was the high June of 2022 and
50.76 -> this is an annual increase okay now
53.34 -> we're down to three you say yeah let's
55.079 -> get out the party right but from three
57.899 -> to two is going to be a lot harder
59.699 -> couple of reasons why number one the
62.28 -> comparisons to a year ago are going to
64.559 -> be hot are harder meaning that as the
67.02 -> Consumer Price Index has come down over
69.119 -> time when we look back a year later it's
72.119 -> going to be a little bit more difficult
73.86 -> to get that movement also we've seen
77.22 -> great progress in energy you know we're
79.32 -> not at 120 dollars a barrel and five
81.9 -> dollar gas that's come off but we are
84.78 -> now seeing a little resumption a little
86.58 -> bit of acceleration so what the FED is
89.159 -> really trying to do is stake a claim
91.5 -> here and say we're not done on inflation
93.84 -> we're concerned we'll go by another
96.84 -> quarter of a percentage point because we
99.299 -> believe the economy can absorb another
101.34 -> quarter of a percentage point and we'd
103.259 -> still want to see that inflation rate
105 -> continue to come down okay so then the
107.939 -> question is how will that impact me just
110.759 -> a regular person well let me look at you
112.439 -> specifically okay okay so most of us
114.54 -> have a real impact that we feel from the
117.6 -> Federal Reserve it seems like this
118.979 -> esoteric thing in DC that happens but
121.2 -> most of us are either borrowers or
123.6 -> Savers and when we we borrow money at
126.36 -> least on a short-term basis those rates
129.179 -> will remain high and even if the FED
131.58 -> stops even if they say okay after this
133.86 -> meeting we look back and say that was
135.54 -> the end of these rate hikes they're
137.76 -> going to keep the rates higher for
140.04 -> longer than many people expect that
142.14 -> means borrowers are going to pay more in
144.18 -> interest costs it means even though the
146.58 -> FED does not control mortgage rates
148.68 -> mortgage rates are going to stay high so
150.72 -> borrowers are contending with those
152.34 -> higher costs Savers they're partying
155.22 -> they are partying like it has not been
157.68 -> this great in a long time right because
160.2 -> it's amazing you can go online you can
162.42 -> find five percent rates on savings and
165.36 -> CDs and this is an amazing turn of
168.78 -> events for people who just a few years
171 -> ago were contending with zero percent
173.04 -> interest so I think that this is a real
175.62 -> impact that we could all feel we're sort
177.959 -> of getting used to it the most important
179.76 -> thing is that we realize when the
181.92 -> Federal Reserve speaks when we hear
183.78 -> these officials talk they are guessing
186.3 -> about the next PATH forward they don't
188.819 -> know they thought inflation would be
191.34 -> temporary or transitory it's lasted a
194.4 -> lot longer than they thought and when
196.5 -> they say we think there's going to be
197.76 -> another rate hike by the end of the year
199.2 -> maybe but maybe not so I expect that you
203.58 -> know Wall Street won't react in a
206.04 -> volatile manner because this was sort of
207.9 -> predicted and Wall Street sort of like
209.58 -> stability when you said that the FED
211.5 -> thinks we can absorb another interest
213.3 -> rate hike does that have something to do
215.58 -> with the fact that wages also keep going
218.519 -> up and wages are going up inflation is
221.64 -> slowly going down and we're starting
223.319 -> they're not meeting yet but they're
225 -> pretty close well I would say for people
227.28 -> who are in the middle to lower income
229.62 -> Arena that is really interesting because
232.5 -> their wages went up much more than say
235.62 -> the upper middle to the high and so
238.26 -> those wage gains are holding as
240.78 -> inflation comes down and we have
242.34 -> actually flipped right now where median
245.4 -> increases are exceeding the pace of
248.76 -> inflation which is great news think
250.739 -> about this let's go back and we say okay
253.019 -> if I was a worker in an Amazon warehouse
256.199 -> and I was making 12 or 13 bucks an hour
258.78 -> a few years ago inflation was really low
261.06 -> but now inflation is higher but I'm
263.88 -> making 20 bucks an hour so life has
266.58 -> actually improved for many people not
268.86 -> everyone but many people on the lower
270.84 -> end of the spectrum the big areas that
273.06 -> the FED is concerned with when it comes
274.56 -> to the labor market is they want to see
276 -> job creation they don't want to see wage
278.16 -> gains go up by too much that helps fuel
280.199 -> inflation right so when they think we
282 -> can absorb it they mean the labor market
283.74 -> is strong enough the economy continues
286.08 -> to grow we are not in a recession all
288.36 -> those people who said we're going to be
289.56 -> in a recession in 2023 they're kind of
291.54 -> erasing those predictions thank goodness
293.46 -> for erasers they're really psyched that
296.52 -> they are seeing growth and we are going
298.62 -> tomorrow morning we're going to get the
300.24 -> first estimate of second quarter growth
302.04 -> GDP that's going to show a plus sign and
304.68 -> and we had two percent growth on an
306.479 -> annualized basis in the first three
307.979 -> months of the year yeah the next three
309.419 -> months we're probably going to see maybe
310.74 -> one and a half 1.8 percent it will slow
313.32 -> but it's still growth and we'll take
315.24 -> growth I think that I mean I want to say
317.58 -> soft Landing because I don't want to
318.96 -> change but okay
321.54 -> but it's all right it's good it's good
323.28 -> it's all good so far so good yes Jill
325.139 -> Schlessinger thank you very much sure
Source: https://www.youtube.com/watch?v=LpBYpme_cIA