NICK GOSNELL
Hutch Post
HUTCHINSON, Kan. — The Federal Reserve on Wednesday raised its benchmark interest rate by 75 basis points for the first time since 1994. Economist Ernie Goss says expect to pay more for loans right away.
"We're going to see interest rates, both long term interest rates and short term interest rates rise," Goss said. "I expect the prime interest rate will be three quarters of a percent higher tomorrow. That will be moving from 4% to 4.75%. I expect it to rise even more. By the end of the year, we're going to see prime interest rates potentially being above six percent. That's up from what we saw earlier in the year of 3.25%. This is a big, big, big jump."
Mortgage rates will follow along.
"Mortgage rates, which have risen by two percentage points over the last year, are likely to move even higher," Goss said. "Probably as much as one to one and a half percentage points by the end of the year, so mortgage rates, higher, auto loan rates, higher, then growth is going to come down from that."
The question is will it come down so fast as to turn the economy upside down and cause a recession. The Fed has hit the brakes hard, the results remain to be seen.