The Federal Reserve has raised interest rates by the biggest margin in nearly 30 years. The Fed’s FOMC raised the federal borrowing rate by 0.75%, the largest move in a single meeting since 1994.

Fed Raises Prime Rate to 4.75%

The U.S. Federal Reserve’s Federal Open Market Committee (FOMC) has raised interest rates for the third time in 2022. The FOMC met Wednesday to address spiraling inflation further, with rates rising a further .75% to 4.75%.

The increase of 75 base points – or three-quarters of a percentage point – follows an increase of 50 points (or .5%) in May and an increase of 25 base points (or .25%) in March – the first time rates increased since the coronavirus pandemic.

FOMC Bullish, but Economy Continues to Struggle

The FOMC appears bullish on the long-term future of the U.S. economy. Still, the continuing conflict in Ukraine seems to be having severe impacts on supply chains globally.

“Overall economic activity appears to have picked up after edging down in the first quarter,” the policy-setting Federal Open Market Committee said in a statement, repeating its commitment to “ongoing increases.”

The Fed’s FOMC is expected to make additional rate increases this year, with some experts estimating 1.9% in additional rate increases by the end of 2022. Many experts expect the FOMC to raise rates by a total of 3.4% this year, with 1.5% already added through three rate adjustments.

What Can Consumers Do to Help Save Money?

The Prime Rate increase will have many borrowers worried. Consumers with revolving loans, such as credit cards, should plan for APR increases in the coming weeks. Higher interest rates will make it more expensive to carry a balance on credit cards, making now an excellent time to consider a balance transfer or low APR credit card to consolidate existing balances.

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