U.S. President Joe Biden is suffering from a high-priced nightmare ahead of the midterm elections on the 8th of next month. The U.S. Federal Reserve is likely to step on the “Giant Step” for the fourth consecutive time as the U.S. Labor Department announced on the 13th (local time) that the U.S. CPI rose to 8.2 percent in September, higher than expected. As a result, interest rates are expected to jump up to 5% early next year. Inflation has emerged as the biggest negative factor for President Biden victory in the midterm elections, given that prices are closely related to people’s livelihoods.
When the CPI was announced, President Biden stressed in a statement that “fighting global inflation that affects countries around the world and U.S. households is my top priority.” “Americans are suffering from the cost of living,” he said. “This is the key reason why I am running for the presidential election, and it is very important to give the middle class a space to breathe.” He also stressed, “There is still a lot of work to do, but today’s announcement shows some progress in price control,” adding, “The inflation rate recorded an annual average of 2% in the past three months, down sharply from 11% last quarter.”
The Fed has raised interest rates since March and has recently taken the giant step three times, but has not been able to catch a surge in prices exceeding the 8% range. The Fed is expected to raise interest rates to 4% at the Federal Open Market Committee (FOMC) on the 2nd of next month.
Market watchers even analyze that the benchmark interest rate will reach 5% early next year. According to FedWatch, interest rates are likely to rise to 4 percent on the 2nd of next month to 96.3 percent, and interest rates are expected to reach 4.75 percent at the last FOMC of this year on December 14.
In the market, there are growing concerns that housing costs will also rise as interest rates rise sharply. According to Bloomberg, the U.S. mortgage rate (30-year fixed rate) more than doubled from 3.33% earlier this year to 6.92%. Some analysts say that if it breaks the 7% barrier in the future, it could rise to 8.5%.
