How Federal Reserve Rate Hikes Will Impact the Economy in 2019

Greg McBride, chief financial analyst at Bankrate, breaks down how the Fed's rate hikes could impact the economy.
Author:
Publish date:

Whew. Here we go again. 

The speculation around rate hikes just doesn't stop. Greg McBride, Bankrate's chief financial analyst, believes that the Federal Reserve will hike rates twice in 2019. 

But what about the impact on the economy? McBride breaks it down.

"Well, these rate hikes affect the price of money. So, as the Federal Reserve raises benchmark interest rates, it affects the price of loans for both consumers and businesses alike. So, it changes the calculation whenever a company is looking to expand, whenever they're deciding whether or not to make an investment in a particular project or equipment," said McBride.

"And from the consumer side, it impacts affordability on whether or not you're gonna be able to afford to buy that big house you have your eye on, how much your monthly payments are going to be for your various forms of debt, whether it's credit cards, car loans or your home equity. All of that collectively can act as a break on the economy to keep either inflation from getting out of hand or to keep asset bubbles from forming," McBride said.

Want to see more from the interview with McBride? You can watch the full interview here.