OKLAHOMA CITY (KFOR) – The Federal Reserve raised interest rates Wednesday to fight some of the highest inflation in decades and pacify recession fears.
According to the Associated Press, the three-quarters of a percent increase will drive consumer and business loans to their highest levels since 2018.
“[It’s] designed, of course, to kind of slow the economy down, to bring down this terrible inflation rate that we’ve been suffering through the last year,” said Steve Agee, Ph.D., an OKCU professor and economist specializing in energy policy, banking, monetary theory, and macroeconomic policy.
Agee said the effort could bring inflation down from about 9% to 2-3%, and consumer costs to more reasonable levels.
“Supply chain issues are still a problem out there. And that’s going to create additional, continuing inflationary problems. We have to hope that some of those issues resolve themselves on their own,” he said.
But, he added, those positive effects could take time.
“When the Fed engages in this type of monetary policy, it usually takes a year to 18 months for those policies to really kick in and impact the economy,” he added.
“Now, having said that, almost immediately you’re going to start seeing increases in the costs of borrowing, [and] everyone needs to be prepared: if they expect to borrow money going forward, it’s going to cost them more.”
Retailers in the region hope the effort will help keep their doors open.
The Owner of Spiked. Coffee said the costs to keep her coffee shop running keep going up in just about every area.
“A bag of coffee has almost doubled, and milk is up three to four dollars a gallon,” said Brittani Hunter in an interview Wednesday with KFOR.
Anchored to a burgeoning retail center down NE 23rd Street, Spiked.Coffee is part of a revitalization currently happening in northeast Oklahoma City.
“In addition to your products doing it, your payroll costs have to go up because you’re competing [with major retailers] for staff,” she added, also saying she’s had to pass much of those cost increases on to her customers.
“Last month, we were close [to shutting down],” she continued, saying that to diversify income sources and drive revenue, she is now utilizing the coffee shop as an event venue, and has set up a GoFundMe to help offset rising costs.
“What if we can’t sustain, or what if our customers can’t afford to come in? How do we make it past another week,” she said.
“Part of the reason why I put my shop here was because there was nothing [like it] close,” she said, also noting her desire for the shop to serve as a safe space for the NE Oklahoma City community.
“We keep our hygiene products in our bathroom [and] in the wintertime, we keep a coat rack outside. Right now, our community knows if you’re using water, you can come in and get it,” she said.
“If I leave, where will all of my regulars go?”