The Federal Reserve is expected to announce a half-point increase in interest rates on Wednesday afternoon, which will drive up mortgage and credit card rates and increase the cost of obtaining a home equity loan. home.
According to Rutgers University economist James Hughes, with inflation continuing to rise, the Fed has little choice.
How rising interest rates curb inflation
He said the idea here is quite simple.
“By increasing the cost of something, you reduce demand, and when you reduce demand, price increases begin to level off.”
Hughes said an example of this would be Jersey’s hot property market, which has been booming for two years.
“By making mortgages more expensive, you reduce the demand for housing, and if the demand for housing is reduced enough, those house price increases won’t increase very much,” he said.
He said the Fed was raising rates by half a percentage point instead of the traditional quarter point because inflation had taken off and the Fed had been caught off guard.
“If they see inflation in the future, they try to get ahead and start raising rates first, this time although inflation has gone up, so they are far, far behind the curve,” Hughes said.
How long will it take to slow inflation?
He said no one really knows the answer to that question.
“They’re going to be watching very closely with all of their metrics, what’s the impact every time they raise interest rates, does that have a metric effect,” he said.
Hughes pointed out that the exorbitant price of gasoline is linked to the price of oil, which is being pushed up by the Russian invasion of Ukraine, so pump prices are likely to continue to remain high until that this conflict is resolved.
He said you can’t reduce inflation unless you reduce the size of economic growth and “unfortunately that could push growth into negative territory and that means a recession.”
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These are the best hiking spots in New Jersey
A trip to New Jersey doesn’t have to be just the beach. Our state has incredible trails, waterfalls and lakes to enjoy.
From the Pine Barrens to the Appalachian Trail to New Jersey’s hidden gems, you have plenty of options for a great hike. Hiking is a great way to spend time outdoors and enjoy nature, plus it’s a great workout.
If you descend and encounter an uphill hiker, pull to the side and give the uphill hiker some space. An uphill hiker has the right of way unless they stop to catch their breath.
Always stay on the trail, you may see side paths, unless marked as an official trail, avoid them. Going off the trail, you risk damaging the ecosystems around the trail, the plants and wildlife that live there.
You also don’t want to disturb any wildlife you encounter, just keep your distance from the wildlife and continue hiking.
Cyclists must yield to hikers and horses. Hikers should also give in to horses, but I’m not sure how many horses you’ll encounter on New Jersey trails.
If you plan to take your dog on your hike, they must be on a leash and be sure to clean up all pet waste.
Finally, pay attention to the weather, if the trail is too muddy, it’s probably best to save your hike for another day.
I asked our listeners for their suggestions on the best hiking spots in New Jersey, check out their suggestions: