NewsHillsborough County


What do anticipated federal rate hikes mean for you?

Federal Reserve Building Fed
Posted at 10:33 PM, May 02, 2022
and last updated 2022-05-02 23:17:53-04

TAMPA, Fla — When it comes to a jump in interest rates Victor Claar, an economist at Florida Gulf Coast University, said it's not a matter of when but it's now of a question of how much the federal reserve will raise them.

"The fed will raise interest rates through 2022," he said. "I think the consensus right now is that they'll raise them by half a percent."

Leaders with the country's central banking system will be meeting this week to make that call. And Claar said it's a delicate decision due to the current state of our economy.

"The fed is really, really concerned about inflation right now, and one way to slow down a hot economy is to make it even more expensive to borrow money," Claar said. "Whether you're a consumer or whether you're a firm and you need to borrow money to finance a new project."

Those interest rate hikes don't just impact new borrowers it also means that some people will see a spike in interest rates on existing debt.

But Claar added that the news isn't all bad.

"If you have savings and you've been earning nothing at your local savings bank, you might begin to see a dividend that's paid to your savings every month and that's a great thing," he said.

Ultimately, it's a decision the fed will likely have to make a few more times in the coming months.

"But I think they're very concerned with whether another half percent or even three-quarters of a percent on top of that might be worth doing at the next meeting six weeks from now," he said.