TAMPA — In his second meeting as the new chairman of the Federal Reserve, Kevin Warsh announced at a news conference on Wednesday that the Fed has decided to maintain interest rates in a range of 3.5% to 3.75%.
“The committee is continuing its policy of making ample reserves in the banking system,” said Warsh.
This decision comes after two days of deliberation.
Watch report from Larissa Scott
Three Fed officials voted against the policy action, wanting instead to raise interest rates as the central bank figures out how to deal with the high inflation rate.
Tampa Bay 28 spoke with Dean Lyulkin about this. He’s a financial markets expert and the CEO of Cardiff.
“Three of the 12 Fed governors, voiced their opinion that it’s time for The Fed to raise interest rates,” said Lyulkin.
He believes there’s one main question on people’s minds.
“What will The Fed do in the future that could impact both our daily lives, inflation, and the economy?” Said Lyulkin.
There are many people who’ve told Tampa Bay 28 they were hoping the Federal Reserve would lower interest rates, in part to buy a new house.
“My son, he’s 23. He got lucky. He lives in a nice place, but he keeps saying, what am I going to do? How am I going to buy a house?” Sandy Sherk, who lives in Pinellas County, said.
However, lowering interest rates doesn’t seem like it's on the table anytime soon.
That’s because the current inflation rate is sitting at 3.5%, with the Federal Reserve stressing it remains committed to getting that number down to its 2% goal.
“The committee remains resolute, you’ve heard this before, but we will deliver price stability,” said Warsh.
Which means for now, you likely won’t see changes to your budget, and prices will remain high at the grocery store.
It’s something Tampa Bay 28 has heard from people in the community recently.
“Everything has gone up, like some stuff are almost double,” said Kerisse Sentino, who lives in Hillsborough County.
“I always joke with my husband when we have 10 things on the little conveyor that it’s going to be $200 because everything has increased. Everything,” said Sherk.
Experts are largely blaming the war with Iran as the main driver of the current economic uncertainty, with rising energy and fuel costs responsible for many of the recent price increases, as fears grow over how long this could last.
“A concern is that we are going to get deeper and deeper into this conflict and that energy prices are going to be much higher for the rest of this year. Those higher energy prices are going to end up in the prices of the products that we buy online, in the prices of groceries, due to transportation costs, and will trickle down into rent and other categories that affect our daily lives,” said Lyulkin.
Some economists thought The Fed would raise the rate by a quarter point this week, and projections hint that could be coming before the end of the year in an effort to lower inflation.
“A huge concern is that the main driver of The Fed potentially raising interest rates in the next few months isn’t anything The Fed can control. It’s really this conflict that’s happening in the Middle East,” said Lyulkin.
Thomas Stockwell, Assistant Professor of Economics at the University of Tampa, has said this is a delicate balance.
“So you can raise interest rates which is going to put downward pressure on economic activity but also keep prices down. Or you could lower interest rates which is going to increase economic activity but then that will also increase inflation. So you have to pick one,” said Stockwell.
The next Federal Reserve meeting is September 15-16.
Share Your Story with Larissa
Larissa Scott stays on top of everything related to education and public health for Tampa Bay 28. If you have a story you want to share, send Larissa a message below.
.
Pinellas educators speak out about potential health insurance hikes
Pinellas County School Board approved enlisting help from a third party to review policies and look for savings.
