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There’s no escape from the Fed’s interest rate hike

The Federal Reserve hiked up interest rates by three quarters of a percentage point. It was something not seen in nearly 30 years.
Published: Jun. 17, 2022 at 6:45 AM EDT|Updated: Jun. 17, 2022 at 7:05 AM EDT
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(WFSB) - Financial experts warned that the country needed to buckle up because the economy will continue to be a roller coaster.

The Federal Reserve hiked up interest rates by three quarters of a percentage point. It was something not seen in nearly 30 years.

It’ll end up costing people a lot of money.

Whether people have a healthy savings account or live paycheck-to-paycheck, they will be directly impacted.

The hope though is that the Federal Reserve’s short-term adjustment can help put the economy back on track. However, that’s expected to take a while.

Millions of Americans said they felt just like Ana Camarena or Rocky Hill: Prisoners stuck in a lousy economy.

“Gas is too expensive. Interest rates going up. And you cannot use your credit cards anymore,” Camarena said.

CBS news analyst Jill Schlesinger said unfortunately there was no quick fix.

“It’s just been a really hard year for the average investor and the reason is, it’s kind of like that Martha and the Vandellas song. ‘There’s nowhere to run to baby, there’s nowhere to hide,” Schlesinger said. “Stocks have been down this year and also bonds have been down as interest rates are rising, and I think that’s the combination that’s really scary for people.”

Financial experts said people should prioritize paying bills and eliminate debt because interest rates will likely only go up. People should also hold off on making any real estate transactions.

“If you sell and buy something new, that house will cost more and your rate will go up,” said Ted Rossman, senior industry analyst, Bankrate.com. “A lot of people now are locked in [a] 3 or 4 percent mortgage. If you take a new one at 6 percent, that’s going to hurt.”

The interest rate spike will also impact people paying off any type of loan.

Basically, borrowing money will be more expensive.

“Paying the minimum is going to drag out those payments for a really long time unfortunately,” Rossman said. “In the eyes of the credit bureaus, paying the minimum will keep you on time but it will cost you a lot on interest if that’s all you’re paying.”

“It’s been an awfully long time since the Federal Reserve has had to chase inflation once it’s been at this level, so the degree of difficulty in threading this needle is so high that investors are incredibly spooked,” Schlesinger said.

Financial experts warned that the country needed to buckle up because the economy will continue to be a roller coaster.