LYNCHBURG, Va. – Economic concerns continue to mount as the Federal Reserve meets to discuss interest rates. Experts are anticipating the biggest increase in decades, in an effort to get a 40-year high inflation under control.
“The last time we were in this kind of situation was in the late 70′s when we actually ended up with interest rates that were up at almost 20%, for a very short period of time,” said Nancy Hubbard, dean for the College of Business at the University of Lynchburg. “It does happen. However, it hasn’t happened in 40 years, so this is really new territory for a whole generation of Americans.”
Sky-high inflation and a potential recession are weighing heavily on Americans, as the Federal Reserve is headed for rough waters.
Hubbard and other experts are predicting a hike of three-quarters of a percent, something that hasn’t happened since 1994.
“The Fed is actually trying to stay on top of inflation and trying to rein it in,” Hubbard said. “At the same time, they’re creating a balancing act. If they raise rates too quickly, what will happen is the economy can stall and then we end up in a recession.”
Investors are on edge. The stock market has been struggling to stay in the green.
However, Hubbard said for those who have a long-term horizon, there’s no need to panic.
“If you’re retiring within the next few years, talk to your financial advisor. If you’re looking at 10, 20, 30 or 40 years out, you will go through many of these by the time you retire,” said Hubbard.
Meanwhile, more Americans are being struck by another blow.
“A national AAA survey found that 75% of Americans said they would cut back or change their behaviors when gas prices hit $5 a gallon,” said Ali Ragina, AAA spokesperson.
Inflation is also targeting many family budgets. In the U.S., clothing is up 5%, housing is up 5.5% and food is up 10.1%.
The Federal Reserve is expected to make a decision Wednesday.