WASHINGTON, DC — Mortgage rates topped 4% for the first time since 2019 and the Federal Reserve announced a series of further rate hikes last week, two major shifts that mark the economic response to months of high inflation.

The Federal Reserve announced a 0.25% interest rate hike and announced that six more hikes are on the way. Last week’s increase is aimed at curbing inflation, but may have negative effects on economic growth. Meanwhile, mortgage rates are expected to rise along with the Federal Reserve rate.

“The Committee seeks to achieve a maximum employment and inflation rate of 2% in the long term. With an appropriate firming of the monetary policy stance, the Committee expects inflation to return to its 2% target and the labor market to remain strong,” the Federal Reserve said in its release announcement. rate hike. “In support of these objectives, the Committee has decided to raise the target range for the federal funds rate to 1/4 to 1/2 percent and anticipates that continued increases in the target range will be appropriate. In addition, the Committee plans to begin reducing its holdings of Treasury securities, agency debt and agency mortgage-backed securities at an upcoming meeting.

The Federal Reserve justified the increase by saying that the labor market had reached a sufficient level.

“Economic activity and employment indicators have continued to strengthen,” the Federal Reserve said. “Job creations have been strong in recent months and the unemployment rate has fallen considerably. Inflation remains elevated, reflecting pandemic-related supply and demand imbalances, rising energy prices and broader price pressures.

These mortgage rates will make it harder for Americans to buy a home, even as real estate prices soar.

“Home sales fell more than 7% in February,” said Elizabeth Kreiselmaier, one of several Republican congressional candidates running on economic issues, which are expected to help Republicans win heavy victories in November.

Congressional Republicans currently hold a double-digit lead on the wildcard ballot against Democrats.

“Mortgage rates are on the rise as household savings are reduced by inflation, making it harder for first-time buyers,” Kreiselmaier said. “This is a direct result of failed Biden/Kilmer economic policies.”

Critics say the latest multi-trillion-dollar federal spending spree, led by President Joe Biden, is to blame.

“It’s the epitome of how big government policies go wrong and hurt the little guy,” said Jonathan Williams, chief economist at the American Legislative Exchange Council. “The Biden administration’s trillion-dollar spending increases are directly responsible for inflation and therefore rising mortgage interest rates that are making it harder for hard-working Americans to buy a home. .

“The Federal Reserve is raising interest rates in an attempt to bring down high inflation, which is the product of overspending by the federal government,” he added. “Anytime Congress basically prints money, it leads to inflation.”

Williams said fixing federal spending is the long-term solution.

“For anyone who loved their so-called free public money over the past two years, here’s the result: inflation, and now, higher interest rates,” he said. “The political solution is for the federal government to pass a meaningful balanced budget amendment, just as 49 of our 50 states have already done. If designed correctly, it would prevent the federal government from overspending, which would inevitably lead to a disastrous cycle of inflation and high interest rates. We need our policymakers in Washington to look to the states, the laboratories of democracy, to find policy solutions that work for ordinary Americans. »