Experts explain how another federal spike in interest rates will impact your wallet
BIRMINGHAM, Ala. (WBRC) - The federal government is set to meet next week to determine another interest rate hike. UAB Associate Professor of Economics Dr. Josh Robinson said it’ll likely be by half a percentage point.
“They are clearly doing it so quickly this time because inflation has gotten so bad,” said Robinson. “There is a school of thought out there that says that is still not enough. Not a big enough hike based on the inflation we have right now. It’s not an exaggeration to say it is the worst inflation we’ve had in forty years.”
Robinson said they are going to have to raise rates more than half a percentage point to make a big difference, but you should notice small changes soon.
|Robinson said depending on the industry, some prices will actually drop down again.|
“We may see price decreases in certain sectors, those where the prices are more supply driven,” he said. “Food production, those have been more influenced by supply chain than others. Or used cars, that is very dramatically influenced by the chip shortage and stopping the release of new cars.”
With more federal interest rate hikes likely in the future, Robinson said now is the time to start paying off debt.
“Now would be a really good time to consolidate that debt in to a fixed rate loan,” he said. “Even if the fed doesn’t get inflation under control, lenders will start to incorporate their expectations about inflation into the interest rates.”
The Federal Open Market Committee will determine the exact amount for the spike and it is set to meet May 3 and May 4, and meet again in June.
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