We finally had a year with little impact from COVID-19 in 2022, but the year was not without its challenges. Towards the end of 2021, inflation started to climb and reached numbers we hadn’t seen in decades. This trend continued into 2022 and the year-over-year inflation rate peaked at 9.1% in June, the highest rate since 1981. In response to these inflation numbers, the Fed began raising interest rates in March and kept right on raising them throughout the year. We started 2022 with a Prime Interest Rate of 3.25% and ended the year at 7.50%.

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I’d like to talk a little about interest rates in this article. As you are all painfully aware, interest rates are on the rise. Interest rates are the expense associated with borrowing money. When interest rates are low, borrowing and the associated spending by consumers and businesses increase. When demand for products and services exceed supply, prices rise. The measure of these rising prices is called inflation. A little inflation is good. When prices are going up, people want to buy now rather than pay more later. This increases demand, resulting in business expansion and higher employment. Too much inflation, however, can be disastrous. The current inflation rate in the US is 8.3% and it has been above 6.0% for the past year.