BRIGHTON, NY (WROC) – The Federal Reserve raised interest rates on Wednesday for the 4th time in 2022 in hopes of tackling rising inflation, the worst in more than 40 years. Higher rates will increase the cost of borrowing money – the impact, as one financial expert told News 8, will be a “delicate balancing act” to get the economy back on track healthy.
George Conboy with Brighton Titles said the Fed’s increase of three-quarters of one percent – is not a small number.
“It’s considered a big increase, especially after they did the same thing last month. So two consecutive increases of three-quarters of one percent,” says Conboy.
That’s one and a half percentage points so far in 2022. The reason, he said, is to try to cope with soaring inflation.
“Inflation is bad for families, it’s bad for individuals, it’s bad for business,” he said.
He said the government had added trillions of dollars to the economy as production slowed during COVID: too many dollars are now chasing too few goods.
The Biden Administration said Russia’s invasion of Ukraine is partly to blame, also saying inflation is a global problem as we emerge from the pandemic.
David Price today on Park Ave. says it’s felt everywhere. “Everyday necessities: toilet paper, food, you know — staples like bread, milk,” Price says.
With interest rates rising, Conboy says that could have another effect. This could mean that people will buy fewer “large scale” items.
Wiljar Ojur and her husband walk around town, say they want a loan for a house, but it’s hard with rising rates. “We don’t want to keep renting because the price of renting each month is a bit ridiculous,” she says.
And Conboy says what’s happening now with interest rates and inflation could SLOW the economy down even more — a tricky balancing act. “Raise rates to reduce inflation – you risk job losses and a recession,” he says, adding that we’ll know more about a real recession in the coming weeks.
The Fed said Wednesday that its goal was to keep inflation at its 2% target. Today, inflation stands at 9.1%. You can watch the full briefing with Chairman Jerome Powell here.