Experts: Battling inflation a gradual process
While Wednesday’s increase to the interest rate by the Federal Reserve was the second to happen within a month and a half, the impact to consumers is still relatively negligible, according to a local financial adviser.
Howie Pentony, founder and owner of Pentony Capital Management in Portersville, said the Fed’s bump of 75 basis points brings the interest rate to a range of 2.25 to 2.5%, in an effort to curb inflation.
When banks’ borrowing rates are higher, that typically discourages consumers from taking out loans or charging purchases to credit cards, helping to slow inflation, according to Pentony.
“Banks make more money when interest rates are higher; you and I pay more to borrow money,” Pentony said. “If (the Fed) thinks things need shut down quickly, they raise interest quickly. It's not necessarily a bad thing, as long as they don't get too high.”
The Fed last bumped the rate in June, also by three-quarters of a percentage point, which was the biggest increase since the mid-1990s.
Although the increases are atypical for the Fed, Pentony said he is skeptical that the move will work to slow inflation, especially seeing that property prices are still relatively high.
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