Lynchburg economics professor explains how the Fed interest rate hike could impact you

Experts say this is the biggest interest rate hike since 1994

ROANOKE, Va. – A new step in the battle on inflation – The Federal Reserve announced Wednesday another hike in interest rates.

This time, the Fed hiked interest rates by three-fourths of a point, making this the fourth interest rate hike this year.

“The demand-pull inflation is what the Fed is going after. They are trying to slow down the demand for goods and services which in return will then slow down inflation,” said University of Lynchburg economics professor, Gerald Prante.

Prante said there is evidence showing the previous interest hikes have worked, like the housing market cooling off.

“People may not pay as much for a house or they hold off on buying that house until mortgage rates get lower,” Prante said.

Many people said they’re waiting to buy a house or car until interest rates go back down and the economy slows.

“You can’t risk it at this point because you don’t know what’s going to happen. I’m waiting for the economy to slow on down before I decide anything like that,” said Amherst County resident, Michael Turpin.

Which is exactly what the Federal Reserve is trying to do, but it’s a fine line between slowing down the economy and avoiding a recession.

“The Fed’s number one priority is to get inflation under control and then try and get a soft landing and not have that demand decrease be too large, where you put the economy into a recession,” said Prante.

To prepare for a potential recession, Prante recommended that you can start to put money into a savings account and cut back on spending.


About the Author

Sydney joined the WSLS 10 News team in June 2021.

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