Borrowers in Bay Area to feel impact of largest interest rate hike in years
SAN RAMON – The Federal Reserve made its most aggressive move yet to tamp down inflation Wednesday, by raising the interest rate by three-quarters of a percentage point.
If you're a borrower, you're going to pay more to pay off your debt.
The nation's central bank is using the tool it has to slow down the economy and stop inflation. But it's a fine line to walk as there's a threat of a recession looming.
U.S. stocks closed slightly higher Wednesday after the Federal Reserve announced its biggest rate hike in nearly 30 years.
"Last time they went up this high was 1994," said Chris Harris, senior vice president of San Ramon-based mortgage firm CMG Financial. "So it's been awhile. What they're really trying to do is use some of the tools they have to curb inflation."
Harris said consumers will be hit hard if they owe money.
"They're going to see this in many places. They're going to see this in their credit card spending, in car loans, they're going to see this in their mortgage rates," he explained to KPIX 5.
The move by the Federal Reserve comes as the inflation in the U.S. has reached a 40-year high. Families are now spending $350 more a month than they did last year to buy the same products.
At CMG Financial, it's seen mortgage rates nearly triple since the beginning of the year, marking one of the largest increases over this short period of time.
"The start of the year, we knew interest rates were going to go up. We did not predict, in the mortgage industry, they were going to go up this quickly," Harris said.
While the increase announced Wednesday was steep, experts are saying more rate hikes may come in the near future.