Casey Harper, The Center Square
For the first time in 2019, mortgage rates have surpassed 4 percent. The Federal Reserve also announced rate increases this week. These are two important shifts to mark an economic response after months of rising inflation.
Federal Reserve has announced an increase of 0.25% in the interest rate and six other increases are expected. Last week’s increase is meant to rein in inflation, but can have negative effects on economic growth. The Federal Reserve will likely increase mortgage rates.
RELATED: Bloomberg lectures Americans on Inflation: Take the Bus, Eat Lentils and Let Your Pets Die
“The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. With appropriate firming in the stance of monetary policy, the Committee expects inflation to return to its 2 percent objective and the labor market to remain strong,” the Federal Reserve said in its rate hike announcement. “In support of these goals, the Committee decided to raise the target range for the federal funds rate to 1/4 to 1/2 percent and anticipates that ongoing increases in the target range will be appropriate. In addition, the Committee expects to begin reducing its holdings of Treasury securities and agency debt and agency mortgage-backed securities at a coming meeting.”
Federal Reserve justification for the increase was that the market for jobs had reached sufficient levels.
“Indicators of economic activity and employment have continued to strengthen,” the Federal Reserve said. “Job gains have been strong in recent months, and the unemployment rate has declined substantially. Inflation remains elevated, reflecting supply and demand imbalances related to the pandemic, higher energy prices, and broader price pressures.”
These mortgage rates, despite rising house prices, will make it more difficult for Americans to own homes.
Support Conservative Voices!
Register to Receive the LatestGet political news, insights, and commentary directly delivered to your email inbox
“Housing sales slip over 7% in February,” said Elizabeth Kreiselmaier, one of many Republican Congressional candidates running on economic problems, which are expected to help hand Republicans hefty wins in November.
Currently, the lead for the generic vote against Democrats is double digits in favor of the Congressional Republicans.
“Mortgage rates are on the rise, as household savings are reduced by inflation, making it more difficult for first time buyers,” Kreiselmaier said. “This is the direct result of failed Biden/Kilmer economic policies.”
Critics claim that President Joe Biden’s recent federal spending spree, which has surpassed several trillion dollars in total, is the culprit.
“This is the epitome of how big government policies go awry and hurt the little guy,” said Jonathan Williams, the chief economist at the American Legislative Exchange Council. “The Biden administration’s trillion-dollar spending increases are directly responsible for inflation and thus the rising mortgage interest rates which are making it harder for hard-working Americans to buy a home.
“The Federal Reserve raises interest rates in an attempt to bring down the high inflation, which is the product of the federal government’s overspending,” he added. “Anytime Congress essentially prints money it leads to inflation.”
RELATED: Conservative Firebrand Dinesh D’Souza Rips Biden Voters – ‘Happy’ About Karma Coming Their Way
Williams stated that reducing federal spending was the best long-term solution.
“For everyone who liked their so-called free government money over the past two years, this is the result: inflation, and now, higher interest rates,” he said. “The policy solution is for the federal government to adopt a meaningful balanced budget amendment, just as 49 of our 50 states have already done. When done correctly, it would reduce federal government overspending. This will prevent a vicious cycle of high interest rates and inflation. We need our policymakers in Washington to look to the states, the laboratories of democracy, for policy solutions that work for everyday Americans.”
The Center Square permission granted this syndicated version.