NORFOLK, Va – The Federal Reserve is increasing interest rates again, but this time by three quarters of a percentage point.
Old Dominion University economics professor Bob McNabb mentions that if the federal reserves “pump the breaks” on the economy too quickly we could be headed into a recession.
The Federal Reserve’s choice to increase interest rates is an attempt to gradually take money out of the economy by expanding the price of the US dollar.
Experts say that sooner than later it may be more expensive to take out a loan, pay off credit cards or even buy a home.
If you’re searching for a home expert say housing prices will continue to skyrocket and might not drop at all. However, if you rent your home you’re more likely to experience inflation versus homeowners who sealed the deal with fixed mortgage rates during the peak of the pandemic.
“Now with the Fed increasing interest rates you’re slowing demand but you’re also constricting housing supply because you’re making it more expensive to build. So housing prices are unlikely to tumble downward like they did in the last recession.” said Dr. Mcnabb.
At this moment, the United States is experiencing high inflation and low growth. In other words stagflation. This means the price of gas or groceries increase. People aren’t spending their money on casual activities like restaurants.
If stagflation is not offset by the federal governments increasing interest rates it could lead us into a recession and eventually people will lose their jobs.