The hike could affect the way you buy, borrow and save money in the coming years.
After several years of near-zero rates to help stimulate a lagging pandemic economy, the Federal Reserve is changing course to stabilize the highest inflation the country has seen since the 1980s. The quarter-point increase in the federal funds rate Wednesday marked the first of what will likely be multiple incremental increases this year.
“You really had to be on top of what was new to the market if you wanted a shot at getting it,” said Andrew Linebarger, who will close on a house next week. “Even if you did want to put in an offer, you’d be up against cash offers, 20,000 over asking, so it was frustrating.” She explained communities of color, who historically face disproportionate hurdles to lending and accurate appraisal, will likely feel the brunt of the impact from higher interest rates.
He explained investment portfolios, such as 401Ks and other retirement savings could fluctuate as well, because of both rising interest rates and the volatility caused by the conflict in Ukraine.The idea behind raising the Fed’s interest rate is to lower consumer spending and effectively tame rising inflation rates. If it has the desired effect, consumers could see prices go down on everyday products like clothing, food, and other goods.
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