Fed raises interest rates for 5th time this year

The Federal Reserve raised a key interest rate by .75% for the third straight time as a way to fight rising inflation.
2:06 | 09/22/22

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Transcript for Fed raises interest rates for 5th time this year
AGAIN, REDCROSS.ORG/ABC. >>> NOW, TO NEWS ON THE ECONOMY AND THE FIGHT AGAINST INFLATION IN THIS COUNTRY. THE PRICES YOU'RE PAYING REALLY FOR EVERYTHING. TONIGHT, THE FEDERAL RESERVE RAISING THAT KEY BENCHMARK INTEREST RATE YET AGAIN IN A BATTLE TO SLOW INFLATION. THE INCREASE, ANOTHER THREE-QUARTERS OF A PERCENTAGE POINT. THE FIFTH HIKE THIS YEAR. HOW THIS WILL AFFECT CREDIT CARDS, CAR LOANS, KNEW MORTGAGES, AND WILL IT WORK TO SLOW INFLATION? HERE'S OUR CHIEF BUSINESS AND ECONOMICS CORRESPONDENT REBECCA JARVIS NOW. >> Reporter: TONIGHT, IN THE FIGHT AGAINST INFLATION, THE FEDERAL RESERVE RAISING THAT KEY INTEREST RATE BY ANOTHER THREE-QUARTERS OF A PERCENTAGE POINT. >> WE HAVE GOT TO GET INFLATION BEHIND US. I WISH THERE WERE A PAINLESS WAY TO DO THAT. THERE ISN'T. >> Reporter: TODAY'S HIKE, THE THIRD SINCE JUNE, WILL MAKE NEW CAR AND HOME LOANS MORE EXPENSIVE. YOU'LL ALSO PAY MORE ON YOUR CREDIT CARD. TAKE FOR EXAMPLE THE AVERAGE BALANCE, ABOUT $7,000. IF YOU'RE MAKING MINIMUM PAYMENTS, TODAY'S HIKE COULD COST YOU AN ADDITIONAL $416 IN INTEREST. MORTGAGE RATES, WHICH HAVE DOUBLED SINCE JANUARY TO MORE THAN 6%, ARE HEADING HIGHER TOO. IN WASHINGTON, D.C., MATH TEACHER EMILY BROWN AND HER FAMILY HAVE OUTGROWN THEIR RENTAL. SO, SHE CRUNCHED THE NUMBERS. >> IT'S A BIG LIFE DECISION. YOU HAVE TO DO THE MATH. >> Reporter: THE ONLY WAY THEY COULD AFFORD TO BUY WAS TO CUT THEIR BUDGET BY $100,000. >> WE HAD TO GIVE UP ON SOME OF THE THINGS WE WANTED, LIKE A GARAGE, LESS SQUARE FEET, AND EVEN FARTHER OUT FROM D.C. THAN WE HAD ORIGINALLY PLANNED. >> SO, LET'S BRING IN REBECCA JARVIS, AS WE ALWAYS DO ON THIS. AND REBECCA, THE FEDERAL RESERVE EXPECTED TO KEEP RAISING RATES, INTO NEXT YEAR. AND THE FED WARNING THIS COULD ALL LEAD TO HIGHER UNEMPLOYMENT? >> Reporter: THAT'S RIGHT, DAVID. THE FED SIGNALED TODAY IT EXPECTS TO HIKE INTEREST RATES ANOTHER 1.25% THIS YEAR. WHILE WE'VE SEEN GAS PRICES DROP MORE THAN A DOLLAR SINCE JUNE, OTHER AREAS LIKE THOSE RENTS AND GROCERIES CONTINUE TO CLIMB. AND THE FED HAS MADE IT CLEAR, ITS NUMBER ONE PRIORITY IS FIGHTING INFLATION, EVEN IF IT MEANS THE JOBLESS RATE, UNEMPLOYMENT, GOES UP. DAVID?

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