CMU Professor Explains How Rising Interest Rates Will Affect Your Portfolio | Business

MID-MICHIGAN (WJRT) – Inflation is still near levels not seen in decades.

In an effort to fix the problem, the Federal Reserve is raising interest rates by half a percentage point – the biggest increase in more than 20 years.

“The Fed is raising interest rates as a way to ease off and put the brakes on to try to slow the economy down,” said Jason Taylor, an economics professor at Central Michigan University.

Although the move is expected, the increase could cause some consumers to forego more money than before.

Whether it’s paying off a credit card, trying to secure a mortgage or receiving a student loan, Taylor said the amount of interest paid could take a bigger chunk out of personal budgets.

“The prime rate, the most relevant interest rate for people, could go up to 6%, from 3 or 3.5% just a few months ago,” he said. he declares.

On the other hand, those who invest the money could see a positive long-term impact.

“If you’re a saver, low interest is not your friend. Now you can put your money in a bank account or certificate of deposit or something and start earning positive interest on that,” Taylor said.

This is not the last rate hike Americans can expect. In March, the Federal Reserve announced its intention to raise interest rates up to six times this year.

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