Most of us buy both items with borrowed money so changes in the interest rate, i.e., the cost of money, have the most immediate impact on those two categories. It has two blunt tools with which to do those jobs: raising and lowering interest rates and expanding or reducing its own balance sheet. For more than a decade, first to fight the Great Recession and then the economic impact of COVID, the Fed pushed interest rates to near zero. Neither we nor the Fed knows yet what interest rate level will bring inflation down to the desired 2% range. However, the impact of higher rates has already begun, especially regarding home purchases and prices.

Source: The Herald August 18, 2022 20:03 UTC