LITTLE ROCK, Ark. — The Federal Reserve announced today its biggest hike to interest rates in nearly 30 years. Officials hope a 0.75 percentage point raise increase will curb inflation, but what other effects could it have on how we live?

Truth is whether you are a home buyer, renter, or someone using a credit card for groceries or gas, this historic interest rate was made to affect you. Hopefully, positively.

“Everything’s up there man. It’s hard,” Keith Johnson, who is actively looking to buy a home for the first time.

With prices going up everywhere he looks, it’s hard to see interest rates go up too. Johnson has been looking for a dream house since 2021 and has seen people outbid him and overpay time and time again.

“I’m not going to overpay,” Johnson said. “We’re still looking, but we’re kind of like on standby right now.”

Unsure of what to do, he’s waiting to see how the market reacts.

According to the Labor Department’s Consumer Price Index tool, inflation rose 1% in May alone and 8.6% over the past 12 months, far exceeding expectations.

“The fed is walking a very tight wire,” Dr. Michael Pakko, UA Little Rock Chief Economist & State Economic Forecaster, told our station.

He explained the reason the fed is increasing interest rates is that it is the only tool they have to slow the rapid inflation.

“Today will hopefully be encouraging for people who are suffering through price increases on fixed incomes and trying to make ends meet,” Dr. Pakko encouraged.

When interest rates go up, the ripple effect is felt by anyone financing debt for a credit card, a car, or a home. Mortgage lender Gabriel Womack said buyers will feel the increase.  He balanced that explaining, “Pandemic rates were at an all-time low.”

 The VP of mortgage lending at Guaranteed Rate added, “The reason that they are increasing the fed rate is because they lowered it so much already it was not sustainable.”

Fortunately, according to Womack, mortgages rise and fall with inflation.

He told our station, “That’s kind of where we’re coming from, what we’re looking forward to, and why it’s a good thing for mortgage rates.”

Whether this move gets inflation under control is yet to be seen. Stocks finished with gains for the first time in a week on Wednesday following the rate increase announcement.

 Johnson doubts prices will adjust as quickly. If something does change for the better, he hopes it is the price of houses first.

Ultimately, he believes the interest rate increase only hurts him. “It narrows my options down, my budget, and I’m picky so that’s no help at all,” Johnson concluded.

Even with the potential to curb inflation, Dr. Pakka said if you are making a major purchase, it might be better to act sooner rather than later. He anticipates interest rates rising another point-and-a-half or more throughout the remainder of 2022.