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Economics expert addresses how fed rate hike will impact your finances

People are not necessarily excited to see the interest rate go up, but one expert we talked to told us that this is what the economy needs.
Published: Jun. 15, 2022 at 3:12 PM EDT|Updated: Jun. 15, 2022 at 4:20 PM EDT
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SPRINGFIELD, MA (WGGB/WSHM) - The Federal Reserve has raised the interest rate by three-quarters of a percent. It’s the largest rate hike since 1994.

People are not necessarily excited to see the interest rate go up, but one expert we talked to told us that this is what the economy needs.

It was a major move on Wednesday as the Federal Reserve announced its biggest rate increase in 28 years: three-quarters of a percent. How will this impact you? We’re getting answers from John Rogers, a professor of economics at American International College.

“Most people buy things with borrowed money. They get a car loan, they got a mortgage on their house. They use their credit cards. All of those things are going to be more expensive,” Rogers explained.

So why make things like interest rates and credit more expensive?

“That’s going to cause people to spend less. That’s going to cool the economy off…That’s going to cause prices to back off and that’s their objective,” Rogers added.

Western Mass News caught up with several people who told us lower prices on things like gas and groceries is what they’d like to see.

“Everything you go after now, everything is going up in price, it’s pretty crazy,” said Nicholas Battista of Agawam.

We asked Rogers for an example of how a mortgage payment could be impacted by the increased interest rate.

“A large mortgage, say $400,000, could go up $600 a month,” Rogers noted.

[Reporter: Does this make you want to buy a home sooner because of the potential rise in interest rate?]

“Yeah, prices of the houses right now, they are through the roof, so I mean, it is a little scary. If you buy something, I think they are probably going to come down, I would hope,” Battista said.

Meanwhile, Rogers said this action by the Federal Reserve was delayed.

“They should have started raising interest rates sooner than they did. Now, they’re kind of playing catchup,” Rogers said.