Fed Chair: More Rate Hikes Coming

One downside of the booming economy is higher interest rates.  The Federal Reserve has been gradually raising rates over the last two years as the economy gained positive momentum, and that trend is not going to end anytime soon.  This week, in testimony before committees of both the House and Senate, Fed Chairman Jerome Powell signaled that the economy is healthy, and thus more rate hikes are on the way in order to tamp down inflation.

"Americans who want jobs have a good chance of finding them, and moreover, wages are growing a little faster than they did a few years ago," Powell told the Senate committee.  "With a strong job market, inflation close to our objective, and the risks to the outlook roughly balanced, the FOMC (Federal Open Market Committee) believes that for now, the best way forward is to keep gradually raising the federal funds rate."

The Fed has already raised the benchmark rate by a quarter-point twice this year, and is expected to approve at least two more rate hikes by the end of the year.

For the average consumer, that will mean higher borrowing costs.  "When you open up a credit card, interest rates are going to be a little bit higher than before, and it could also mean higher payments on mortgages," says Bruce McClary with the National Foundation for Credit Counseling.  "The average interest rate for credit cards right now is near record territory--it's about 17 percent, which is pretty steep---so people with average or poor credit are really going to feel the pressure."

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