Area economist: Recession could near as feds raise interest rates

CEDARVILLE — The Federal Reserve announced Wednesday the biggest inflation rate hike in 28 years, three-quarters of a percentage point.

>>Fed attacks inflation with its largest rate hike since 1994

News Center Seven’s Molly Koweek spoke with an area economist about how this will affect our spending.

Jeff Haymond, an economics professor at Cedarville University, said the rate increase will make it harder to buy certain things.

“Clearly, we’re not going to be doing the buying that we thought, that’s intentional.”

Haymond said it will also mean higher interest rates for things like houses, cars, student loans and credit cards.

“That’s going to put a lot of these items out of reach for many consumers.”

Haymond added that the Feds hope these higher interest rates will help prevent a recession, something he thinks is highly likely to happen.

“I am personally believing we are going to have a recession. I’m watching the data now, to see if it’s going to be as soon as this fall, which is going to be my best guess right now.”

Haymond said the the federal reserve has never stopped inflation anything close to these levels without causing a recession.

Federal Reserve Chairman Jerome Powell said he plans to keep raising rates until prices come down.

“Rather than saying is it a good thing? The question, is it a necessary thing? And the answer is yes, it’s necessary.”

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