Inflation has remained high over the past year, causing serious damage to consumers and investors alike. Economists hoped August would bring better news, but it didn't.
Earlier this week, the U.S. Bureau of Labor Statistics (U.S. Bureau of Labor Statistics) released August consumer price index (consumer price index) data, which measures changes in the cost of consumer goods. Data show that prices are growing at an annual rate of 8.3 percent as rising food and housing costs offset falling energy prices.
Investors are now setting their sights on the Federal Reserve, which has been actively fighting inflation with its main tool — interest rate hikes. When the Federal Reserve raised interest rates by 75 basis points in June, this was the biggest rate hike in 28 years. The Federal Reserve raised interest rates by another 75 basis points in July, and investors expect similar increases at next week's meeting. Although interest rate hikes have raised borrowing costs and hurt most companies, bank stocks have benefited. h That's the reason.
One of the main ways banks make money is to charge customers credit interest rates that are higher than interest rates on deposits. While some banks earn extra income from processing fees and others have a lucrative investment banking sector, most banks earn income from interest rates.
When interest rates are low, banks face challenges because this tends to reduce the spread, that is, the interest charged less the amount paid. When interest rates rise...

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