>> Thinking about buying a new car, shopping for a home loan, or just ready to do some retail therapy with that credit card? Be prepared to pay a little bit more. Federal Reserve Chairman Jerome J Powell Wednesday hiking interest rates in his first policy setting meeting since taking the job.
The benchmark lending rate used to set everything from mortgages, to car loans, to credit cards now set at 1.5 to 1.75%. And Powell was clear in his debut press conference rates are heading even higher.>> On the one hand the risk would be that we wait too long and then we have to raise rates quickly and that for shortens the expansion, we don’t wanna do that.
On the other side, if we raise rates too quickly, inflation then really doesn’t get sustainable up to 2% and that will hurt us going forward. We’re trying to take that middle ground and the committee continues to believe that the middle ground consists of further gradual increases in the Federal Funds rate.
>> The Feds, sticking to plans for two more rate increases this year. Though lifting previous forecasts for 2019 and 2020. Investors initially responded with a rally in stocks and bond yields. But that reversed by the closing bell. Borrowers, however, just had to do the math. Take for example, an adjustable rate mortgage says Reuters reporter Kate Duguid.
>> They'll take a hit of $1250 this year on an adjustable rate mortgage worth about $500,000. But you have to consider that this is the 6th rate hike in the cycle, and we may have two rate hikes in the rest of this year. So another two rate hikes would mean that $10,000 since the beginning of the rate hiking cycle will have been added to your interest payments
>> The same cumulative effect will be felt by credit card users, but that won't start showing up in monthly bills for at least another two months.