Federal Reserve raises interest rates for the first time since 2018

CEDAR RAPIDS, Iowa (KCRG) - The Federal Reserve is raising interest rates for the first time since 2018. This comes along with the expectation for 6 more increases coming this year, all in an effort to fight inflation which is at a 40-year-high.

“The American economy is very strong and well-positioned to handle tighter monetary policy,” said Jerome Powell, Chair of the Federal Reserve of the United States.

The quarter-percent rise to policy interest does not directly impact consumers.

“What this is, is the interest rate that banks charge each other for loans,” said Matt Hylland, Financial Planner with Arnold & Mote Wealth Management.

This effort to slow down the economy and tamp down inflation will eventually make its way to the consumer.

“What we’ll see more in the short term is probably a rise in interest rates on credit cards, personal loans, any kind of short-term debt,” said Hylland.

Hylland says this is no reason to sound the alarm. But much like the uncertainty of the pandemic, the war in Ukraine is adding additional pressure to the Fed’s effort to fight inflation.

“The surge of prices commodities and crude oil as a result of Russia’s invasion of Ukraine will put additional upward pressure on near term inflation on here at home,” said Powell. “The implications of Russia’s invasion of Ukraine for the US economy are highly uncertain,”.

The federal reserve will host its next meeting in May.

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