What the Federal Reserve’s interest rate hike means for you
RENO, Nev. (KOLO) – Hoping to crush inflation, the Federal Reserve raised interest rates from 0.75% to 1%.
“The bigger the difference between supply and demand, the more inflation we experience,” said Matt Rowley, CEO of Freedom Retirement Services in Reno. “It’s hard to get supply back up overnight, but it’s easier to reduce demand by limiting money in the economy.”
While the hike may provide relief from soaring prices, Rowley says borrowing will cost more.
“People may not be able to spend as much as they would on something like a house, so maybe they get a smaller house, which can also impact the real estate industry,” said Rowley. “Maybe fewer people will borrow or buy homes.”
While this may reduce competition, local real estate experts say Reno and Sparks will remain a seller’s market until supply increases.
Credit cards are another area where people can feel the effects of rising interest rates.
“Credit card rates, although they’ve been around 16%, I’m sure we’ll see them go up to around 18.5% or even higher,” Rowley said. If you have a balance on your credit card and you have debt that you are trying to pay off, this increase in interest rates will certainly have an impact.
So, while saving for the future, be sure to pay your debt.
For those whose retirement savings are invested in the stock market, says Rowley, it’s important to seek advice.
“Investors find it harder to access money or they can’t access it as much, so there’s less investment, so we can see an impact on Wall Street,” Rowley said. “It is important to have a strategy and to work with someone rather than being alone, a bit at the mercy of everything that happens with the tariffs.
The Fed is confident that the central bank can fight inflation without dampening economic growth
According to NPR, The Fed hopes to calm demand by making borrowing more expensive. But interest rates are still low by historical standards, so the central bank will likely have to act aggressively to catch up, with another half-point hike expected at the next board meeting. Fed in June.
If you would like financial assistance, you can contact Freedom Retirement Services here.
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