>> American consumers will pay more this summer for whipping out that credit card, driving off in a new set of wheels or buying a new home, thanks to the Federal Reserve. The Feds keys landing rate used to set bar and cost for everything, why not begin this week to a range of 1.75 to 2% adding to interest rate payments that were already on the rise, says Reuters Fed watcher, Howard Schneider.
>> Over the last couple of quarters, 6 to 9 months, 30 year year borrowing rates on average have ticked up about three quarters of a percentage point. Now if you consider say a 30 year mortgage on a $250,000 loan, that's gonna add about a $100 a month to the payment.
>> That's roughly the same amount the average family has pocketed each month from the Trump tax cuts that started showing up in paychecks earlier this year, and the mighty consumer has kept on shopping. Retail sales surge nearly a full percent in May and the biggest jump in six months, but gains like that could be in jeopardy.
The Fed is predicting two more rate hikes this year, and three more next year.>> People have jobs, people are working, that translates into money spent. But, over time inflation's firming up, that means lower real wages. Wages themselves are not actually taking off that dramatically, and now if it cost more money to borrow, that could start crimping household budgets a bit.
And this is something the Feds are gonna be watching very closely, over the next year to a year and a half.>> If higher rates take too big a bite out of consumer spending and slow the economy, the Fed may be forced to adjust how fast it wants to keep those rate hikes coming.