March 15, 2022 Business Article: LESSONS FROM THE 2008 OM THE 2008
RECESSION AND WHAT TO EXPECT O EXPECT IN THE UPCOMING BUR OMING BURSTING OF THE BUBBLE & CRASHING OF THE SHING OF THE STOCK MARKET The Federal Reserve headed by Jerome Powell is set to hike interest rates on March 16, 2022, for the first time since 2018 to address the worst inflation in 40 years spurred by the coronavirus pandemic. Consumers already hit with higher prices might be wondering how it will help cool off rising costs. The Federal Reserve has main goals that are focused on in the economy: to promote maximum employment, keep prices stable and have moderate long-term interest rates. Generally, the central bank aims to keep inflation around 2% annually, a benchmark that it lagged before the pandemic that must be addressed. The Fed’s main tool it can use to battle inflation is interest rates. It does so by setting the short-term borrowing rate for commercial banks, and then those banks pass it along to consumers and businesses, said Yiming Ma, an assistant finance professor at Columbia University Business School. That rate influences everything from interest on credit cards to mortgages and car loans, making borrowing more expensive. On the flip side, it also boosts rates on high-yield savings accounts. The main worry for economists is that the Fed raises interest rates too quickly and dampens demand too much, slowing down the economic recovery. This could lead to a higher unemployment rate if businesses stop hiring or even lay off workers to stay afloat. The Fed has signaled that it will likely raise interest rates in March. How much that
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