I previously wrote about the need to focus on inflation for the upcoming midterms. It looks like the Federal Reserve has done just that, with a 0.75% rate increase in the federal funds rate and rumblings that there may be another 0.75% increase next month. The past two recessions were preceded by the Fed raising rates in the aggregate to 5% or 6% (after today’s increase, the rate is 1.75%), so it seems reasonable to speculate that interest rates could rise to those levels in the current fight against inflation.
The potential problem is the midterms. People are already facing spiking costs for a variety of goods, especially gasoline, and the tendency of some is to blame those currently in power.
Now we have interest rate increases, which are expected to trickle down (or “trickle up?”) into the regular economy over the next 1-2 months, just in time for people to start focusing on them before the midterms. Variable rates are expected to increase in many types of debt commonly held by Americans, including:
- Credit cards
- Variable rate mortgages and home equity loans/lines of credit
- Some student loans
- Personal loans
I don’t blame the president (or the former president for that matter) for either inflation or rising interest rates — I don’t think presidents really have that much control over these issues. But I think a lot of people will try to lay blame with President Biden because they don’t recognize this.
So it’s another thing to worry about in the midterms, and I thought I would create a poll to gauge how people on our site are thinking about the issue.