Mega Interest Hike Is Coming: How Will It Affect You?

Federal Reserve Chair Jerome Powell warned Friday that the Fed will likely raise interest rates again in the coming months to control the strongest inflation in four decades.

As the Federal Reserve keeps fighting to contain inflation, Americans should prepare their financial situation for further higher interest rates this year.

Although the Fed has raised its benchmark short-term fed funds rate by 3% this year, with the latest three hikes at 75 basis points apiece, consumer inflation is reaching a 40-year high.

With inflation at its highest level in a generation, the Fed's policy-making arm is likely to raise its benchmark rate by 0.75% to 4% on Wednesday.

The Fed is anticipated to boost rates by 75 basis points on Wednesday, which would be the fourth such increase in a row.

The Fed's consensus year-end fed funds prediction is 4.4% and 4.6% next year before falling. That suggests a December rate hike is likely.

Economists expect the Fed to raise rates by a half-point in December to push inflation to 2%, but another 0.75% hike is possible. Deutsche Bank expects a 0.75% rate hike in December.

In September, annual inflation slowed to 8.2% from 8.3% in August, but the core rate excluding volatile food and energy reached 6.6%, the highest increase since August 1982.

Existing fixed-rate mortgages won't alter. Recent and prospective homebuyers face higher rates due to Fed hikes through 2022.

Higher rates and recession (or stagflation) have impacted stocks, but market gurus are split on whether stocks will drop further this year.

S&P 500 earnings have so far surpassed analyst projections by 5.8%, in keeping with the historical average of 5%.