SAVANNAH, Ga. (WSAV) — The Federal Reserve raised interest rates Wednesday for the third time this year. This rate (three-quarters of a percent) is the largest since 1994. It’s an effort to slow down inflation and to keep the economy from plunging into a recession.

“The way you look at it is if you have a heck of New Year’s party and you take away the punch bowl then there’s that hangover that lasts for a little bit of time afterward and that’s what the Federal Reserve is doing,” financial expert Mitch Kramer said.

“The Fed allowed this inflation animal to run way too long and now they’re trying to slay it and they’re basically crushing demand by raising rates at a very rapid rate just to have people stop buying stuff and allow the supply chain to unwind,” he said.

Kramer says the stock market responded favorably Wednesday after the move because “investors realize the Federal Reserve is being serious they think ‘okay the Fed can get inflation under control quicker versus longer and we can get back to a more normal economy.'”

But for those with variable interest rates on credit cards and personal loans, your payments will be higher. And for those who’ve been trying to buy a home, Kramer says buy now providing you can find a home available that you can afford.

“For the home buyer it’s going to be a much more significant impact because mortgage rates at the beginning of the year on a 30-year mortgage were 3%,” says Kramer. “Now they’ve doubled that to over 6% so that means your monthly payment is going to be a lot higher and you’re going to have fewer people able to qualify for mortgages.”

He says the Fed’s plan is to drive up the cost of goods and services which in turn reduces the number of buyers and brings prices of the product down.

Yet he says in the real estate market, many sales have been driven by institutional investors because the bond market isn’t making their clients’ money. He says that regular consumers have been competing with those cash buyers and now those consumers will face a higher mortgage payment.

Overall, however, Kramer says the plan is designed to help cool down the economy and provide more stability in the pipeline for goods and more certainty on prices.

“I think it will work. I think that’s why the (stock) market is up. This is probably the most important takeaway, i.e. that the Fed is serious about getting inflation under control and prices will start to come down,” said Kramer.

Kramer also said before all this happened and ‘before COVID’, there was a savings surplus around the world.

“And there’s still a savings surplus so once people feel like the water is safe to go in and they’re not going to get eaten by the inflation shark, the economy will come back pretty quickly,” he said.

Kramer’s advice to consumers is if you have credit card debt, pay it off. He says some cards’ interest rates are currently 15% or higher.