SAN DIEGO COUNTY, Calif. — For San Diegans looking to buy a house or a car, that purchase could soon become more costly.
Wednesday's move by the Federal Reserve to increase interest rates by a quarter percent will impact everything from credit cards to student loans.
This is the first time the Fed has raised interest rates since 2018 in the face of rising inflation rates that we haven't seen for 40 years.
The hope is that this rate hike will help to control that inflation, meaning that we can expect even more rate increases down the road.
"We understand that high inflation imposes significant hardship especially on those least able to meet the higher costs of essentials like food, housing and transportation," said Fed Chairman Jerome Powell.
By raising interest rates, the Fed hopes that demand for consumers goods and services will decrease and better match supply, which economists say will eventually moderate prices.
For those who want to borrow money, however, this rate hike is not welcome news.
"If you're a debtor, then this definitely is going to hurt you," said University of San Diego economics professor Alan Gin.
He added that this is going to make San Diego's already difficult housing market even more so, as mortgage rates and payments could likely climb and financial requirements to qualify for a loan would tighten.
"That might price some people out of the housing market who were just on the edge," Gin told CBS 8.
This means that now may be a good time to try to refinance, before rates rise any further.
"Even though we had a rate hike today, if you could get in there and lock things in, that might help you avoid further increases in the future." he said.
People paying with 'plastic' will also be impacted: you can expect to see your credit cards' annual interest rates creep upward.
"If you have excessive credit card balances, you'll really want to try to address that and get that down as fast as possible," said Ed Moya, senior market analyst with Oanda.
There is some good news, though, for 'savers'.
"You may see a small increase in the amount of interest you earn on a savings, a checking, a money market, even a CD," said CBS News Business Analyst Jill Schlesinger.
Despite these rate hikes, along with the uncertainty posed by the war in Uraine, Gin believes we can weather this storm, pointing to strong GDP growth rebounding from the pandemic, and a tight labor market, with the national unemployment rate currently under four percent.
"The economy is strong enough that it can withstand both the increase in the price of oil and and an increase in interest rates," Gin said.
This is only the first of an expected series of rate hikes by the Federal Reserve.
Experts say there could be several more similar increases throughout the rest of this year.
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