BUFFALO, N.Y. (WIVB) — The Federal Reserve raised its key interest rate by three-quarters of a percent Wednesday, the highest rate hike in almost thirty years. The Fed is trying to tighten the clamps on inflation, but the central bank is also trying to avoid going too far.

The immediate impact is going to be on short-term interest rates that you pay, such as credit cards and car loans, but home mortgages will also take a hit. That will slow down the economy some, but fed officials want to avoid bringing on a recession.

“The economy is running too hot right now because the Federal Reserve left interest rates too low for too long,” said Anthony Ogorek, Ogorek Wealth Management.

Tony Ogorek, president of Ogorek Wealth Management says for years, the Federal Reserve kept interest rates so low they were near zero.. because the aim was boosting the economy and jobs. But that has led to record inflation rates, the highest in more than 40 years, so raising interest is supposed to slow spending.

“That they are not going to buy that car, that they are not going to buy that house, they are not going to be taking that trip, whatever the case may be,” added Ogorek. “Ultimately that slows down demand and that is what is going to bring down prices.”

For those planning to buy a home, it depends on your priorities. Generally, home prices are inversely proportional to the interest rate: rates go up, and prices cool down. Rosalind Burgin, President-Elect of the Buffalo Niagara Association of Realtors told us that Buffalo is such a hot market that rule might not apply.

Higher interest might not lead to lower home prices.

“I would not advise anyone to wait for the interest rates to go down because when interest rates go down maybe housing prices will go up,” said Burgin.

Burgin told us, that a potential homebuyer needs to work with their lender to lock in an interest rate, and for first-time buyers, you can’t get much better than Buffalo.

“I still believe that in Western New York we are in a good market, we are fortunate, and if you are looking for a home you should continue to look. Don’t give up,” Burgin added.

Just to be clear, the Fed’s rate hike jump is the highest since 1994, but the interest rate itself is only about two percent.

In 1994, the interest rate reached three-and-a-quarter percent, and in the late 1970’s it climbed to double-digits, and we called that “stagflation.”

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Al Vaughters is an award-winning investigative reporter who has been part of the News 4 team since 1994. See more of his work here. To submit a Call 4 Action, click here.