Wall Street took a big hit after the Federal Reserve raised interest rates for the fourth time this year.
The markets plunged after Fed Chair Jerome Powell suggested two more rate hikes in 2019. But Powell says now is the perfect time to raise rates, despite pleas from President Trump not to.
“As the economy struggled to recover from the financial crisis and subsequent recession, the committee held our policy rate near zero for seven years to give the economy the best chance to recover,”said Powell.
In its statement, the Fed said “The Committee judges that some further gradual increases in the target range for the federal funds rate will be consistent with sustained expansion of economic activity, strong labor market conditions, and inflation near the Committee's symmetric 2 percent objective over the medium term.”
Still,the U.S. stock market plunged 352 points Wednesday, dropping to its lowest level of the year. The Dow Jones has dropped more than 1,250 points this week, while the S&P and Nasdaq continue one of their worst Decembers since the Great Depression.
“The economy already was going to be slipping from its really strong performance in the second and third quarters,” says Robert Frick, corporate economist for Navy Federal Credit Union.
“This is not going to make any difference on what happens in 2019 in terms of GDP, the employment rate, wages, anything like that.”
Frick dismissed the quarter percent rate hikes, saying they amount to roughly four dollars per $1,000 owed on credit cards or personal loans.
“You can still get a mortgage under five percent. You can still get a very reasonable car loan, especially if you have a good credit rating,” he says.
“So,don't freak out, A. And B, keep in mind that things are still good, especially when considering the job situation and wages are starting to go up.”