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How The Federal Reserve's Expected Interest Rate Increase Will Likely Affect You - YouTube
Channel: NBC News
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well if you're getting tired of paying
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more than four dollars a gallon for gas
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you'll be happy to learn the federal
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reserve is working on a fix for the
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first time in more than three years the
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fed is set to raise interest rates it's
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a move that's meant to help curb
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inflation nbc news now anchor allison
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morris covers business and economy
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issues for us she's joining us now with
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a closer look at what might be coming
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from the fed hey allison erin can you
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believe it it's finally here the fed
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meeting we have been talking about for
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so darn long so we just wanted to make
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sure the fed meets today before its rate
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hike tomorrow that you understand what
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the fed is and what it does take a look
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now to those staggering new inflation
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numbers interest rates the federal
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reserve gas prices the fed is probably
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going to raise interest rates with the
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goal of tackling inflation do you think
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it's going to work
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inflation is at a 40-year high it's beef
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prices it's produce it's avocados gas
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prices are the most expensive they've
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ever been i don't even want to know
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right now i don't even look i just
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swiped the card the pandemic isn't over
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yet and a war is raging in ukraine it
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seems that nothing is now off limit the
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federal reserve dealing with a lot right
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now but it's meeting today and tomorrow
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to try and get some of those things
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under control but first let's talk about
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what the federal reserve is and why a
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dozen of its members are meeting today
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the federal reserve or the fed is the
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united states central bank it's been
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around for over a hundred years and
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think of it like a lasagna with a bunch
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of layers there's the board of governors
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12 regional federal reserve banks and
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the federal open market committee which
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meets eight times a year including today
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the fomc is expected to raise its fed
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funds rate what we typically call
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interest rates a quarter point tomorrow
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its first hike in three years
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now that doesn't sound great but if
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you're tired of paying so much for
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everything from gas to groceries it can
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help so what happens when interest rates
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start going up inflation starts coming
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down stock prices can come down too and
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the cost to borrow money starts to go up
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big mortgages car loans student loans
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credit cards all more expensive let's
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look at mortgages since so many people
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are buying homes these days if you have
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a fixed rate mortgage nothing changes if
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you have an adjustable rate mortgage or
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an arm expect that rate to go up at its
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next reset and if you're looking to get
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a mortgage those rates should tick
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higher too now you might have noticed
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over the last two years with interest
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rates near zero that your savings
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account basically gets pennies on all
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your hard-earned dollars expect that to
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improve
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certificates of deposit or cds will pay
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better interest too so how does a fed
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rate hike then help with inflation it
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encourages people to save money by
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making borrowing more expensive we spend
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less things cost a little less supply
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and demand so what happens tomorrow well
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the fed will wrap up its meeting and
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announce its rate decision at 2pm in a
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statement that explains the decision and
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gives an outlook on the economy at 2 30
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fed chair jerome powell will give a
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press conference inflation is too high
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but we're going to get it back under
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control he goes by jay and he's had that
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job since february of 2018 appointed by
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president trump chair powell will read
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that policy statement and take some
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questions from reporters and our two
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years of zero interest rates will be
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over
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so allison you walked us through this we
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understand inflation is at this 40-year
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high we've been reporting that what is
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it that makes this quarter-point
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increase the right increment to raise
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rates tomorrow you know aaron some
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people might argue that it isn't but
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there's one word that the fed is taking
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into account here and that is ukraine
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you've heard the expression fog of war
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there is so much uncertainty about what
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is going on in ukraine with our global
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economy that the fed doesn't want to do
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anything too dramatic tomorrow that
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could send our economy into a tailspin
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and perhaps even encourage a recession
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so it looks like they're going to go
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with a quarter point if you don't
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believe me just look at uh the cma
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cme group forgive me they have something
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called the fedwatch tool it basically
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tells you what the likelihood is of the
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fed increase and they are saying right
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now that there is a 98
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chance that the fed will hike rates a
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quarter point tomorrow there it is so
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everyone pretty much thinking that's
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what's going to happen tomorrow the fed
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doesn't like surprises so we're not
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expecting any any changes or for them to
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deviate too much from that all right
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allison morris thank you thanks aaron
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thanks for watching our youtube channel
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follow today's top stories and breaking
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news by downloading the nbc news app
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