Daily News Lesson

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July 31, 2023, 10:13 p.m.

How the Federal Reserve uses higher interest rates to fight inflation

Summary

Interest rates are headed higher again, as the Federal Reserve resumes its fight with inflation. That effort is almost a year and a half old now. At the same time, Fed Chair Jay Powell wants to tame inflation without tipping the economy into a recession. Economics correspondent Paul Solman breaks down the thinking behind the Fed's moves. For a transcript of this story, click here. News wrap alternative : Check out recent segments from the NewsHour, and choose the story you’re most interested in watching. You can make a Google doc copy of discussion questions that work for any of the stories here.

Five Facts

  1. When were interest rates last this high?
  2. How important is fighting inflation if it means raising interest rates?
  3. Who has returned to the labor force from the sidelines?
  4. Why has the Fed increased interest rates?
  5. What did the Fed do with interest rates in June?

Focus Questions

Focus question : Do you think the Fed's move to raise interest rates is justified? Why or why not? News analysis : Why do some stories require multiple interview subjects when others need just one? Alternative : See, Think, Wonder : What did you notice? What did the story make you think? What story would you want to find out more about? Where would you go to learn more?

For More

What students can do : Learn about how interest rates work by watching either of the videos below, and discuss what you think are the main points with a classmate or neighbor.

This lesson was written by Benjamin Thernstrom, a high school senior in Arlington, Virginia, and PBS NewsHour Classroom intern, with editing by Vic Pasquantonio. Fill out this form to share your thoughts on Classroom’s resources. Sign up for NewsHour Classroom’s ready-to-go Daily News Lessons delivered to your inbox each morning.

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