Federal Reserve Raises Interest Rates
Wednesday, September 21st 2022, 4:50 PM EDT
Another month, another interest rate hike, with rates now the highest they've been since 2008.
“Homes are going to be increasingly more expensive, as mortgage rates rise, car loans rise, student loans, credit card rates. All of this,” said Dr. William McAndrew of Gannon University.
The Federal Reserve today continued a risky tightrope walk, making money harder to get without killing further growth.
"It's very difficult," said Dr. Kenneth Louie of Penn State Behrend. "The goal is to raise interest rates and slow things down, but at the same time, without doing it so aggressively that it throws the economy into a recession."
Most economists agree its a necessary step, but it's painful.
A slower economy means fewer jobs, and current record-low unemployment figures may soon start rising.
“Just like when you’re sick, you have medicine, and you don’t want to take your medicine," McAndrew said. "You don’t want to be unemployed, but if you don’t, things can be worse later on.”
Still, there's no guarantee this rate hike will work.
It will slow the economy, but other outside factors could keep inflation rates stubbornly high.
"We still have the lingering effects of the pandemic, along with the associated supply chain disruptions," Louie said. "We have the war in Ukraine, and we have people who have, for a couple of years, stayed out of the labor force but are now looking to enter."
For consumers, a rate hike is a call to control your debt. Pay off loans and credit cards, and if you're in the market for a major investment, perhaps move quickly. More rate hikes may be on the horizon.
“If you’re thinking about buying a house or a car, and you’re wanting to wait, thinking interest rates might go down, there’s no crystal ball, but it’s likely that is not going to be the case,” McAndrew said.