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The Federal Reserve chairman says that the central bank will raise interest rates. How will this affect prices of food, housing, and oil?

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When the Federal Reserve raises interest rates, the entire American economy is affected. Generally speaking, when interest rates increase, consumers choose not to spend as much as they might otherwise. This is because high interest rates and a lack of confidence in the economy often go hand and hand. People are far less likely to spend on big-ticket items or to invest in risky propositions when interest rates are higher.

Consumers are also less apt to dine out at restaurants, choosing instead to economize by preparing food at home; and when they do dine out, people may patronize less expensive restaurants. Grocery shoppers are also less inclined to spend money on extraneous or luxury items.

As far as housing is concerned, people are less likely to buy homes when interest rates are high, because increased interest rates means that their total cost of a home is higher. Homeowners who finance their home purchases using a variable rate mortgage—which is a loan without a fixed interest...

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