ROCHESTER, N.Y. (WROC) — “The cost to borrow money became more expensive today,” said Ethan Wade with Brighton Securities, in reference to the Federal Reserve hiking interest rates to a 22-year high. Baseline interest rates are now at 5.5%, up from 5.25%.
Now, a quarter of a percent might not seem like a lot. But Wade said this markup by the Fed is a way to drive up the cost of borrowing to curb inflation. At this point, we’re kind of used to this.
“This is now the 11th time (since March 2022) that the federal reserve has increased what’s called ‘the Fed’s fund rate’,” he said.
This is now the rate banks charge each other to borrow money from each other. That he said — sets up the benchmark for everything else.
“Mortgages, credit cards, home equity, lines of credit, auto loans– whatever it may be,” said Wade.
He said inflation comes down to supply and demand. The feds can’t control supply, but they can control demand.
“Think of it: fewer people can afford a $500,000 dollar home– or just– less people can afford a home now,” he said.
Out for a walk on Park Avenue, News 8 ran into Dee. She, like many, wants to own a home. Dee said for the time being, she’s putting her hopes on hold.
“Like the next step to buying a house or just investing in something big, you know, it’s just hard,” said Dee.
News 8 also spoke to Tommy who works at Jines. He said the American dream just gets further away for more and more folks.
“What made America great in the first place– was the fact that it didn’t matter who you were. You were able to build something that lasted,” said Tommy.
Business owner Brian Harding said for companies borrowing money, that’s going to hit everyone. “(Businesses are) just going to pass it along to the consumer,” he said.
Wade said to sit tight: the Fed might raise rates again. We are not out of this yet.
Wade said inflation is now at 3%, far better than the 9% high this time last year. But he said the goal is to get it even lower, and it’s going to take a while to assess this hike to see if there’s any progress.
“(It’s) hard to predict what’s going to happen. It’s going to come down to the data,” he said.
