/ AP Newsroom)
Investors lifted their expectations of an even bigger, 100-basis point rate hike following the scorching-hot Labor Department report released Wednesday, which showed thein June from a year ago, exceeding market expectations. It marks the fastest pace of inflation since December 1981. Wall Street is now penciling in a 30% chance of a mega-sized rate hike at the Fed's July 26-27 meeting, according to the CME Group's FedWatch tool.
Hiking interest rates tends to create higher rates on consumer and business loans, which slows the economy by forcing employers to cut back on spending. Mortgage rates are already approaching 6%, the highest since 2008, while some credit card issuers have ratcheted up their rates to 20%.
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