A love for hiking: The Fed is raising rates at an unprecedented pace

9/22/22 8:00PM

The Fed's 3x3

‍This week the Federal Reserve signed off on its third consecutive three-quarter point rate hike, lifting the benchmark federal funds rate to a range of 3-3.25%.

That's an unprecedented pace of rate-rises in modern history, signaling the Fed's strong resolve to get double-digit inflation under control. No other hiking cycle has started this steeply since the Fed started targeting the Effective Funds Rate in the 1980s.

For borrowers, this is obviously bad news. Although not always immediate, borrowing costs on mortgages, credit cards and car loans will rise. Indeed, the average 30-year fixed-rate mortgage hit 6.29% this week — the highest since 2008 (chart here). There is, of course, a silver lining for savers as rates on cash deposits should rise — although you may have to shop around to get the best deal.

Unlike when it first appeared on your lockdown dating profile, the Fed's new-found fondness for hiking looks here to stay. Officials project that rate rises will continue into 2023, with estimates that the target rate will hit around 4.6% by the end of next year. Equity investors were surprised again by this week's news, with US stocks down another 3% since Monday.

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JetBlue is raising its bag fees as fuel costs squeeze airlines

JetBlue will reportedly hike its bag fees, as the cost of jet fuel continues to climb amid the war in Iran. It’s the latest example of carriers finding ways to push rising costs onto travelers.

Last week, United Airlines CEO Scott Kirby said that if fuel prices remain elevated, fares would need to rise another 20% for his airline to break even this year.

As CNBC reported, when one airline raises fees, others tend to follow.

Earlier this month, JetBlue hiked its first-quarter outlook for operating revenue per seat mile to between 5% and 7%, saying that strong Q1 demand helped “partially offset additional expenses realized from operational disruptions and rising fuel costs.” Now, the carrier appears to be making moves to further boost revenue to offset those costs.

Earlier on Monday, JetBlue rival Alaska Air lowered its Q1 profit forecast. The refining margins for the carrier’s cheapest fuel option — sourced from Singapore and representing about 20% of Alaska’s overall supply — have spiked 400% since February.

JetBlue did not immediately respond to a request for comment.