SAN DIEGO (KGTV) — For the first time since the beginning of the pandemic, the Federal Reserve appears poised to raise its key interest rate and help curb soaring inflation.
"With inflation well above 2 percent and a strong labor market, the Committee expects it will soon be appropriate to raise the target range for the federal funds rate," the fed said in a statement Wednesday.
Analysts believe that increase to the federal funds rate, which impacts consumer interest rates, would happen in March.
Over the last year, consumer prices have risen seven percent, hitting San Diegans in prices for groceries, gas, housing and cars. It's also crunched businesses such as restaurants, already operating on thin margins.
"Meat's doubled in the last year, everything is going up," Pietro Busalacchi, owner of Trattoria Don Pietro in Old Town, said. "You can always find cheap product but then you put out cheap food, so there's no point in doing that."
Dan Rocatto, clinical professor of finance at the University of San Diego, said the fed's rate hike would have a wide range of impacts
"It creates this ideal that money's more expensive, therefore we're going to use less of it, and it kind of builds on itself," he said. "Ideally, consumers then start to see some change when they go to the grocery store, gas station, etc."
Rates for car loans, mortgages and credit cards would increase, making it more expensive to borrow to make purchases.
However, those putting money into savings accounts would see their dollars get a boost, with banks paying them more interest for their cash.