The Federal Reserve announced its first interest rate increase in three years on Wednesday. Though the increase was a modest quarter of a percent, the central bank also said it planned six additional rate hikes this year.
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The rate increase is to combat 40-year high inflation rates, which have had an impact on the cost of necessities such as gas, food and housing.
"It's always a risk when you start changing things like interest rates, and I think this is again why the Fed is doing it in very small increments is because they're trying to make sure the economy has what would be considered a soft landing so that we can can anticipate what's happening and not just grind the economy to a halt," Ray Major, Chief Economist of the San Diego Association of Governments said.
"A quarter of a percent is not that much, but, after a series of six rate hikes, this becomes a real issue for the economy. It's a problem for the consumer when we start to do a series of rate hikes like this," he said.
Major joined Midday Edition on Thursday to talk about what an interest rate increase means for inflation.
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The Federal reserve made a move yesterday to cool down the inflationary spiral that’s made gas, food and housing prices spike by raising the rates banks use to lend money to each other. -
Dueling proposals from Democrats and Republicans in the California legislature aim to provide relief from soaring gas prices.
