Heartland economics professor speaks out after Federal Reserve hikes interest rates

CAPE GIRARDEAU, Mo. (Heartland News) – Today, the Federal Reserve’s Federal Open Market Committee voted to increase the federal funds rate: a short-term interest rate that banks charge other banks for overnight loans.

They increased the rate from 3.75% to 4%. Households, businesses or any entity with short-term debt are likely to see a ripple effect, as the cost of borrowing will increase as a result of today’s decision.

It means anything from car loans to credit card rates will go up.

While today’s decision will deter many from borrowing money and spending, Southeast Missouri State University professor of economics David M. Yaskewich, Ph.D., says those with savings could likely benefit.

“If one group of people benefitted from today’s decision, it would be those that are actually saving money,” Yaskewich said. “So if the federal funds rate has been increased, we’d likely see interest rates on savings accounts and interest rates on short-term certificates and deposits would likely increase as a result of today. So savers would likely see some benefit from today’s decision.”

Yaskewich went on to say that today’s impact might not be a huge game changer. However, if continued, concerns of inflation could force more rate hikes, meaning there could be a bigger impact felt across the country.