TAMPA, Fla. — When it comes to rising interest rates, Victor Claar, an economist at Florida Gulf Coast University, said it’s not a question of when, but now it’s a question of how much. the Federal Reserve would increase them.
“The Fed will raise interest rates through 2022,” he said. “I think the current consensus is that they’re going to raise them by half a percent.”
Leaders of the country’s central banking system will meet this week to make the call. And Claar said it was a tricky decision given the current state of our economy.
“The Fed is really, really concerned about inflation right now, and one of the ways to slow down a booming economy is to make it even more expensive to borrow money,” Claar said. “Whether you are a consumer or a business and need to borrow money to finance a new project.”
These interest rate hikes don’t just impact new borrowers, it also means some people will see a spike in interest rates on existing debt.
But Claar added that the news is not all bad.
“If you have savings and haven’t earned anything at your local savings bank, you might start to see a dividend paid to your savings every month and that’s a good thing,” he said. .
Ultimately, it’s a decision the Fed will likely have to make multiple times over the coming months.
“But I think they are very concerned about whether another half percent or even three-quarters of a percent on top of that might be worth doing at the next meeting in six weeks,” did he declare.