Bay Area borrowers will feel the impact of the biggest interest rate hike in years

SAN RAMON – The Federal Reserve made its most aggressive move yet to rein in inflation on Wednesdayby raising the interest rate by three-quarters of a percentage point.

If you are a borrower, you will pay more to pay off your debt.

The country’s central bank is using whatever tool it has to slow down the economy and stop inflation. But it’s a fine line to walk as there is a threat of a looming recession.

U.S. stocks closed slightly higher on Wednesday after the Federal Reserve announced its biggest rate hike in nearly 30 years.

“The last time they hit that high was in 1994,” said Chris Harris, senior vice president of San Ramon-based mortgage company CMG Financial. “So it’s been a while. What they’re really trying to do is use some of the tools they have to curb inflation.”

Harris said consumers would be hit hard if they owed money.

“They’re going to see it in a lot of places. They’re going to see it in their credit card spending, in car loans, they’re going to see it in their mortgage rates,” he told KPIX 5.

The Federal Reserve’s decision comes as inflation in the United States hit a 40-year high. Families are now spending $350 more per month than last year on the same products.

At CMG Financial, mortgage rates have almost tripled since the start of the year, marking one of the largest increases in this short period.

“At the start of the year, we knew interest rates were going to rise. We in the mortgage industry hadn’t expected them to rise so quickly,” Harris said.

While Wednesday’s announced hike was steep, experts say more rate hikes could come in the near future.

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