This latest increase comes while the Fed is under greater scrutiny. Many experts predict that May’s rate hike might be the last hike we’ll see for a while. Although the inflation rate is still far from the Fed’s 2% target, the decline in inflation over the past few months is proof that the Fed’s disinflationary measures are working. In the latest Consumer Price Index report, the US Bureau of Labor Statistics measured March inflation at 5% year over year, down slightly from 6% in February and down significantly from its record high of 9.1% in June 2022. This latest rate hike is the tenth consecutive increase since March 2022, bringing the benchmark interest rate to a target range of 5% to 5.25% - the highest it’s been since the Great Recession in 2007. Raising the benchmark interest rate is the Fed’s primary weapon in the fight against inflation. The US central bank doesn’t directly set interest rates, but its actions reverberate to all corners of the financial market, inevitably touching consumer financial products like credit cards, savings accounts and loans. The decision to raise interest rates by 0.25% (or 25 basis points), means credit card annual percentage rates will most likely increase once again. This week, the Federal Reserve raised rates again, a move that will make existing credit card debt even more costly to carry.

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