Who are the winners and losers of the Fed hiking interest rates?

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June 16th, 2022

Used vehicles sit in a storage lot at a Toyota dealership Sunday, Feb. 27, 2022, in Englewood, Colo. Record low-interest mortgages are long gone. Credit card rates will likely rise. You'll pay more for an auto loan. The unusually large three-quarter point hike, Wednesday, June 15, in the Fed's benchmark short-term rate is going to have a lot of impacts on Americans' finances. The hope is that by making borrowing more expensive, the Fed will succeed in cooling demand for homes, cars and other goods and services and slow inflation.(AP Photo/David Zalubowski)

The Federal Reserve has hiked its benchmark interest rate by 0.75%.

But what does that actually mean for hundreds of millions of Americans – Americans who have jobs, who buy things, who have bank accounts?

In short, interest rates are the Federal Reserve’s main tool to combat inflation. Inflation is driven by strong consumer demand. By raising interest rates, which makes things more expensive, the Fed is hoping to dampen Americans’ willingness to spend money.

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