NASHVILLE, Tenn. (WTVF) — As Nashvillians look ahead to the start of a new season, the hope is that cooler air settles in. And sadly, it's not just talking about sweater weather.
The Federal Reserve announced the fifth consecutive interest rate hike this year.
"The main issue is that inflation has been higher than expected. I would say probably way higher than expected. And that is something we don't like. That is something that the Fed doesn't like; that's something that the government doesn't like," said Julio Rivas, associate professor and MBA director at Lipscomb University.
The Fed wants to cool down the economy too.
"I'm pretty sure most of you have experienced that when you go grocery shopping. Things are more expensive," he said.
To fight inflation, the Fed has increased interest rates by another three-quarter of a percentage point. This matters because all eyes are on them.
"That is one of the reference rates that all of the other rates in the market pay attention to. So, if that rate goes up, all of the other rates are going to go up," Rivas said.
That means credit cards, car loans and mortgages will be more expensive to pay off or apply for. Experts say higher rates mean businesses and people feel a bigger pinch in their pocketbooks and as a result spend less.
"If your interest rate is variable, your payments are going to go up. Mortgages are usually fixed rates, but if you're trying to get a new mortgage now, you're going to see that the rates are higher than they were a year ago or a couple of years ago," he said.
And while the housing market might slow down, in Nashville, buying a house still won't come easy.
"We live in a city that has experienced a very steep increase in home prices, so that means that if you're looking for a home right now, chances are that it's going to be pricy, and your mortgage won't be as favorable," he said.
While in the short run higher rates means pain, experts are sure in the long run, things will ease out.
"At the end we should all expect to grow," Rivas said.