Last Wednesday, as expected, the Federal Reserve raised its benchmark interest rate for the first time since 2018. A local expert says even though the increase will make borrowing more expensive, it is meant to help us all.
“Absolutely,” said Matt Rowley- President-Founder, Freedom Retirement Services. “We are a cash-rich society right now. The demand is through the roof. We’ve all seen it.”
Last week the Federal Reserve did something it has not done since 2018. It increased interest rates by a quarter of a percent. The idea is simple: sounds complicated, but it’s meant to help all of us.
“The goal behind it all is to reduce inflation or the cost of everyday goods,” he said. “But it’s at the expense of raising costs of borrowed money.”
Rowley says the money pumped into the economy during the pandemic is the main culprit for inflation…so much cash was forced into the economy, it caused everything to go up in price. However, a raise in interest rates isn’t good news or bad news. He says a move like this will impact us all one way or another - from home loans, car loans, and even your credit card.
“As far as credit card rates go up, which will impact everyday spending for those who spend a lot on credit cards, that are not paying it off every month,” said Rowley.
But is this the last rate hike for 2022? No.
“They’re expected to have six more meetings this year and it’s expected they will rise rates all 6 of those meetings,” he said.
The next meeting of the Federal Reserve is scheduled for May 3, 2022.
