Financial experts weigh in on Federal Reserve raising interest rate

The Federal Reserve raised the interest rate another 0.75 percent on Wednesday, impacting loans that borrowers take out for various needs.Consumers looking for a new car will feel the impact. “We need a bigger car. Our family is growing and we need to move up from a car to an SUV,” said Angel Aguirre.Aguirre and his family were shopping for an SUV Wednesday. They have two girls, ages two years old and five months old, with another baby on the way. It’s not the best timing for a large purchase.”There’s not much we can do about interest rates,” Aguirre said. “We are in need of a car, so it’s like we have to buy it regardless of a 0.75 jump.”Financial expert Kelly Brothers said the Federal Reserve’s move to raise the interest rate another 0.75 percent is how the government keeps inflation in check. “They feel it’s very important to pull inflation back in, to reign it in to get that back under control is raising interest rates and slowing down the economy,” he said. The higher interest rate means paying more for a new car.At the beginning of the year, the average rate on a 60-month new car loan was 3.85 percent. With today’s hike, that rate could be as much as 5.75 percent. The Aguirre’s know they’ll have to stick to their family budget and say they will have to be savvier with their spending.”This definitely will play a big role in our spending, making this transition from a car to an SUV, taking on a new loan with a higher interest rate,” Aguirre said.While families will feel the pinch, Brothers said this will eventually help the economy after the pandemic.”We are not pushing rates up abnormally. We are returning to a more normal rate position,” said Brothers. “What was abnormal was what happened after COVID when we went down to zero and borrowing became cheap and cost nothing.”Brothers said the one upside of the hike is for savers. He said people who keep their money in the bank will see a boost in their interest rate, but not enough to keep up with inflation.

The Federal Reserve raised the interest rate another 0.75 percent on Wednesday, impacting loans that borrowers take out for various needs.

Consumers looking for a new car will feel the impact.

“We need a bigger car. Our family is growing and we need to move up from a car to an SUV,” said Angel Aguirre.

Aguirre and his family were shopping for an SUV Wednesday. They have two girls, ages two years old and five months old, with another baby on the way. It’s not the best timing for a large purchase.

“There’s not much we can do about interest rates,” Aguirre said. “We are in need of a car, so it’s like we have to buy it regardless of a 0.75 jump.”

Financial expert Kelly Brothers said the Federal Reserve’s move to raise the interest rate another 0.75 percent is how the government keeps inflation in check.

“They feel it’s very important to pull inflation back in, to reign it in to get that back under control is raising interest rates and slowing down the economy,” he said.

The higher interest rate means paying more for a new car.

At the beginning of the year, the average rate on a 60-month new car loan was 3.85 percent. With today’s hike, that rate could be as much as 5.75 percent. The Aguirre’s know they’ll have to stick to their family budget and say they will have to be savvier with their spending.

“This definitely will play a big role in our spending, making this transition from a car to an SUV, taking on a new loan with a higher interest rate,” Aguirre said.

While families will feel the pinch, Brothers said this will eventually help the economy after the pandemic.

“We are not pushing rates up abnormally. We are returning to a more normal rate position,” said Brothers. “What was abnormal was what happened after COVID when we went down to zero and borrowing became cheap and cost nothing.”

Brothers said the one upside of the hike is for savers. He said people who keep their money in the bank will see a boost in their interest rate, but not enough to keep up with inflation.

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