Will Americans break free of high interest rates?

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To rein in inflation, there will be pain, Federal Reserve officials say. 

 At the end of September, the Fed boosted its short-term interest rate by three-quarters of a percentage point for the third time to help curb inflation, which continues to hover near a 40-year high.  

The rate hikes “will also bring some pain to households and businesses,” said Fed Chair Jerome Powell at a conference in August. “These are the unfortunate costs of reducing inflation.’’

Inflation is indeed soaring. Americans are paring their diets, debating which bill to pay when, and lining up at food banks. But it is a bleak irony that those hit hardest by inflation — lower and moderate-income Americans  may also be harmed most by the Fed’s actions to bring prices down.

‘Barely making it’Americans are getting creative to combat inflation’s devastating costs

“You’re immediately hurt by higher interest rates while the effect on inflation may take some time,” said Michael Weber, an associate professor of finance at the University of Chicago’s Booth School of Business. “Low and moderate-income Americans are indeed hit quite hard.”

And international trade watchers are raising similar concerns about the impact rising interest rates will have on the most vulnerable across the globe.

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