Consumers are already paying more for gas, groceries and everyday items, but they should expect to fork over more in other parts of their lives after Wednesday’s interest rate increase.
The Federal Reserve’s move to rein in inflation will affect home mortgage loans, credit card borrowing, car loans, labor market stability and overall consumption. The goal is to reduce the amount of money supply in the economy.
“Too much money makes the money less valuable,” said Larry Harris, professor of finance at the USC Marshall School of Business and former chief economist at the U.S. Securities and Exchange Commission. “To control inflation, the Fed has to stop creating so much money. And when it stops creating money, interest rates tend to rise.”
