Here’s How The Fed Rate Hike May Affect Your Salary

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Right now is one of the most expensive times in history.

With inflation at an all-time high, wages being stagnant, and supply chain issues, we have the perfect storm for creating crippling debt among Americans.

Earlier this week, The Federal Reserve Bank announced a 75 basis point interest rate hike which ended up being a 50 percent greater increase than the central bank had initially thought it was going to make for June.  

The idea is that the feds hope the higher interest rate will help curb inflation.

With higher interest rates, that means borrowing money or obtaining loans will be more expensive.

Ultimately, that means it is less likely Americans will buy cars, homes and even obtain new loans and credit.

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.


So, what does all of this mean for your salary?

It means things are going to continue to be tight, especially for those living paycheck to paycheck.

It’ll feel like you are just bleeding money no matter what you do because your paycheck is not going to stretch as far.

Things are expected to be inflated throughout the rest of the year as the Feds try to slowly increase interest rates while also trying to avoid a recession.

The Fed also said it does not expect inflation to decrease this year and sees unemployment rising to 3.7% in 2022, higher than its March prediction.


Your paycheck may not go as far but you also won’t want to be buying or taking on any additional debt due to the inflated interest rates.

If you do have extra income and have debt, now would be a good time to ensure you have low fixed interest rates on things like cars, a house and other loan payments.

If you can, also pay down any debt that has a variable interest rate (such as credit cards) because when the rates continue to increase, you’ll be paying more in interest in the long run.

Basically, saving money in any way you can right now, making more money, and sitting tight is going to be the safest play here.

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