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Finance expert on interest rate hike and your wallet

Posted at 6:31 AM, Jun 20, 2022
and last updated 2022-06-20 06:55:23-04

FORT MYERS, Fla. — Last week, the Federal Reserve increased interest rates by 0.75 percent, the highest such increase in three decades.

It's an attempt to fight back the overwhelming inflation being seen in Florida and across the nation.

But are we flirting with a recession? We took that, and your other concerns, to Florida Gulf Coast University financial expert Dr. Victor Claar.

"It seems like, with all of these indicators we have available to us, we are entering a recession," said Claar, "or possibly that we are in one already."

Those indicators — record-breaking gas prices, alarming increases at the grocery store, housing, and the Gross Domestic Product, which commonly identifies a recession, going down — are raising the stress level of many workers.

According to the latest inflation report, consumer prices increased to about 8.6%, resulting in the average consumer spending nearly $460 more than they did last year for the same goods and services.

"Especially for those low and middle-income families, they aren't having many things they can cut back on in order to make it work for those three essentials," Claar said.

"Inflation makes the money in your pocket evaporate, and it makes the money in your bank evaporate."

Claar says raising the interest rate as the Fed has is an attempt to "cool down" the inflation inferno.

"The fact that it raised interest rates as much as it did, as quick as it did, is a sign that it is way more concerned about inflation," he said.

It hasn't been officially declared by the Fed that we are in a recession. However, Dr. Claar says the silver lining to the interest rate hike, is if you have anything in savings, you may be paid a small amount more in interest there.