BEREA, Ky. (LEX18) — All eyes were on the Federal Reserve as they are raising interest rates today. Rising interest rates could keep costs high.
The Federal Reserve raised interest rates by .75 basis points. This hike could affect everything from credit card payments to private student loans, car loans, and mortgages.
Berea's Kentucky Center for Economic Policy's Executive Director, Jason Bailey, says "The Fed is taking that action to attempt to slow inflation -- but the risk, of course, is when you make things more expensive for people to but, people to borrow."
Many different factors are contributing to inflation, including the pandemic, the war in Ukraine, and supply chain issues. Bailey says it is important for people to stay informed on how this impacts them. He says policies, "They can impact your ability to get a job, your ability to keep a job what your wages are gonna look like over the next year, what you're gonna pay in mortgage or rent. So, these things really matter it's important for people to be informed."
This is the third time this year that the federal reserve has increased interest rates, and there could be more to come.
Bailey shares, "The Fed is indicating they're gonna continue to raise rates until they see inflation start to come down. You know it's likely to come down because a lot of it is caused by the supply shortages that are working themselves out as we get production up for various goods."
Right now, financial advisors from the Family Wealth Group say people should pay down debts with locked-in rates, continue investing in retirement, and consider whether you are a conservative, moderate or aggressive investors. There is no one size fits all recommendation for everyone.
Jason Bailey shares that the Fed's role by law is to keep inflation under control and to keep as many people employed as possible. The concern now is those two goals clashing.
"That's the concern at this point that, the Fed’s actions to control inflation, may lead to higher unemployment."