new year impact on people s budgets in the new year when they are paying back that money. yes, with prices and bills only going in one direction and with christmas spending in full flow, more and more people are turning to credit to help finance it all, but paying that back is sadly only going to be more and more expensive as well. that s because inflation, the rate at which the price of goods increases us at a near 40 year high, way above the bank of england s target rate of 2%. so to control and reduce those soaring prices the bank has been increasing the cost of borrowing by raising interest rates, last month it increased the base rate of interest by 0.75% to 3% the biggest single rise in more than 30 years and the eight consecutive hike since december last year. it is expected to make it nine a later today and it could be nearer 4 per cent next year. that impacts a lot of us because it means things like mortgages, credit cards and loans will all cost more to pay off. and that will
and spike the football with a 40 year high of inflation? can you explain that? well, look at the numbers today came out a little softer than expected, but you re still running seven point one percent year on year. that s a big number. as you suggest. the fed s target is two percent. so you re you re more three times the target rate. and i heard president biden mention food prices. food prices are still up. shawn, 11%. those are grocery prices. food prices at restaurants are also about the same. so you ve got a temporary lull in energy prices, although there s still about 10 , 12% above where they were a year ago. and unfortunately, we still have an inflation problem. it s going to take a while. and look at what you were talking about with kevin mccarthy is so important. you ve got to stop at one point nine trillion dollar omnibus spending bill done by a couple
he boosted another half point today. the fed is signalling that they need to do more hikes through 2024 in order to wrestle inflation down to 2%. it s above 7. they have to get it down to 2%. that s the target rate. that takes some muscle and some finesse, a little bit of both. stephen moore is standing by. first to fox business correspondent gerri willis. hi, gerri. hi, martha. the federal reserve raising interest rates 50 basis points. that s half a point. they re signalling that there s more rate hikes to come in 2023. the hike is the smallest rate increase since the fed started hiking rates in march. markets not happy. can t make up their mind. they had opinion hoping for a clear signal that jay powell and company are about to slow or stop rate hikes. powell in comments said that the federal reserve sees modest economic growth ahead.
for the consumer price index is now at the lowest level since november of last year. it s still way above the federal reserves will publicize target rate for that healthy level of inflation. it says it s around 2%. that pretty much sums up the kind of conflicting headlines that we ve got. that tug-of-war so disapproving the numbers. it s still very much about crosscurrents on inflation. gasoline prices, other fuel costs. have fallen sharply. they ve taken some of the upper momentum out of this price hikes. and inflation. used car prices, medical costs, fell from the previous month. other costs remain stubbornly high. food costs, are still up about have abortion from last month. over 10% from last year. housing cost, shelter costs through six tenths of a percent month over month. there are 7% higher over the last year. that s important. because it s the shelter costs of a corona third of this calculation for the consumer price index. one important and positive here, andrea, is wage grow
it s not the end of the world. i think it s interesting you say coming off the best year last year of real estate history. obviously there will be an adjustment. the bank of america ceo brian moynihan suggests we re in the middle of that. when is it going to get better for housing for americans? this is the toughest thing because you have to slow down the economy. you have to slow down inflation. the way to do that is to raise interest rates. the fed wants us to buy fewer homes? that s right. you are seeing it slow down. you ll see rates come back down to more the target rate and you ll see adjustments come through. that will take almost two years. take almost two years. he s macro forecasting what he thinks will happen and who knows, but i think when people think of housing, buying a home, it s time not timing in the market. it s a long-term investment. it s the best way to create intergenerational wealth and it s 5, 10, 15 years.