Advertisement

‘Borrowing will cost more’: What the Federal Reserve raising interest rates means for you

This is a recurring recording of KOLO 8 News Now at 10.
Published: May. 9, 2022 at 9:03 PM PDT
Email This Link
Share on Pinterest
Share on LinkedIn

RENO, Nev. (KOLO) - With hopes to crush inflation, the Federal Reserve has raised interest rates from .75 to 1%.

“The greater the difference between supply and demand, the more we experience inflation,” said Matt Rowley, CEO of Freedom Retirement Services in Reno. “It’s hard to turn supply around overnight, but it is easier to reduce the demand by limiting the money in the economy.”

While the hike could bring relief from surging prices, Rowley says borrowing will cost more.

“People may not be able to spend as much as they would have on something like a home, so they maybe get a smaller home, which can also impact the real estate industry,” said Rowley. “Maybe fewer people will borrow or buy homes.”

Although this could result in less competition, local real estate experts say Reno and Sparks will remain a seller’s market until supply increases.

Another area where people can feel a pinch from rising interest rates is credit cards.

“Credit card rates, while they’ve been around 16 percent, I’m sure we’ll see them go up to around 18 and a half percent or even greater,” said Rowley. “If you are someone who carries a balance on your credit card and you have debt that you’re working on paying off, those interest rates increase will definitely have an impact.”

So while saving for the future, make sure you’re paying your debt.

For those whose retirement savings are invested in the stock market, Rowley says it is important to seek guidance.

“Investors have a harder time getting access to money or they can’t get access to it as much so there’s less investing so we can see an impact in Wall Street,” said Rowley. “It’s important to have a strategy and to be working with someone rather than be out there on your own, kind of at the mercy of whatever happens with the rates.”

The Fed is positive the central bank can fight inflation without stalling economic growth.

According to NPR, The Fed hopes to cool off demand by making it more expensive to borrow money. But interest rates are still low by historical standards, so the central bank will likely have to move aggressively to catch up, with another half-point increase expected at the next Fed meeting in June.

If you would like financial assistance, you can contact Freedom Retirement Services here.

Copyright 2022 KOLO. All rights reserved.