By Illinois Radio Network
SPRINGFIELD – How will the Federal Reserve’s interest rate increases impact you, especially with the state’s worst-in-the-nation credit rating? The state’s treasurer said that depends.
The Federal Reserve’s Open Market Committee was unanimous in its decision to raise the federal funds rate by a quarter of a percentage point.
Illinois Treasurer Michael Frerichs said that for taxpayers, that’s a double-edge sword.
“From a State Treasurer’s Office perspective, this is a good thing. If we have rising interest rates, we will make more money for the State of Illinois, but it’s not necessarily a good thing for the state. As the state continues to issue debt, to put more debt out there, we are going to be paying more dollars in interest payments with this rate hike,” Frerichs said.
Illinois’ worst-in-the-nation credit rating compounds government borrowing costs even more. The state has been in steady decline since 2000.
“And every time we go out and issue more debt, that’s more money we’re going to pay in interest, and that’s more dollars that are ripped out of the wallets of Illinois taxpayers,” Frerichs said.
More interest rate hikes could be on the way — something Frerichs said means consumers can expect to pay more when they borrow for a house or a car. “And if we see multiple increases over the coming year, this could mean hundreds of thousands of dollars more that families are paying a year in interest.”
Frerichs said the era of cheap money is over.
The Federal Reserve was unanimous on the rate-increase decision, saying the country’s economy is posting solid job gains. However, Illinois’ unemployment rate lags the national average and is worse than that of neighboring states.
