Federal Reserve raises interest rates: Bay Area faces widespread effects

The Federal Reserve raised interest rates by a quarter-point on Wednesday, hoping to curb inflation and cool off the economy.

The Federal Reserve on Wednesday raised interest rates by a quarter-point in a quest to control inflation and cool off the economy, a decision that will affect just about anyone who borrows or saves money.

Rates for home-equity lines of credit, credit cards, car loans, savings accounts and certificates of deposit are all influenced by the Federal Reserve’s moves on interest rates and are likely to head higher.

Borrowers who have home mortgages with fixed-rate loans won’t be affected because their rates are set regardless of what the Fed does.

With its decision on Wednesday, the Central Bank has officially embarked on a strategy that could create a tightrope between tamping down inflation yet avoiding slowing down business and consumer activity so much that the economy tumbles into a recession.

“We are well aware that our decisions affect consumers, families and businesses across the country,” Fed Chairman Jerome Powell said in comments to discuss the rate increase.

The Fed boss insisted that the nation’s economy can withstand the jolts from rising interest rates, which tend to curb economic activity.

“The economy is very strong, there is tremendous growth in the labor market and we expect momentum to continue,” Powell said.

The Federal Reserve decision-makers believe they have little choice but to raise rates, Powell insisted.

“Clearly it is time to raise interest rates,” Powell said.

Ominously, borrowers can expect more hikes in interest rates, the Fed chairman warned.

“We will take steps to ensure that inflation does not become entrenched while supporting a strong labor market,” Powell said.

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