Gas prices rising, this doesn’t only effect how much you pay to fuel up your car. It also effects how much you pay for the goods that you enjoy. Companies across America are having trouble keeping there prices the same, when it now cost them more to produce them, and then ship them out into the market. At the last meeting of the Federal Open Market Committee they planned that at there next meeting that they would bring up interest rates to 5% from the current 4.75%. They hope that this will make more of an ease on the market as it sets now. According to the Department of labor consumer prices have raised higher then their pay.
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This was my point that I was attempting to make in my blog post “Black gold continues to go up in price”. As the price of crude oil increases, it directly affects a myriad of products and services around the globe. Plastics, gasoline, oil, cosmetics, and even some medicines all owe something to petroleum. Not only will consumers pay more at the pump, but this oil trend will impart additional costs throughout the economy.
Granted my understanding on the banking system of the United States is slightly limited… but to the best of my knowledge, ‘raising interest rates’ typically mean increasing the cost to acquire and pay back a loan. By raising interest rates, they decrease the likelihood that investors will take out new loans thus, generally, decreasing market activity as consumer’s supply is lessened. I don’t see how increasing interest rates will help the market…
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