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“Increasing interest rates make that problem worse. It makes it
that much more expensive when cities and counties and school
districts in the state have to go out to borrow money to finance
infrastructure projects,” Marlowe told The Center Square.
Illinois has the lowest credit rating of any U.S. state.
Marlowe said the Fed’s interest rate hikes are eventually priced
into the rates we all pay, including governments.
“Ultimately, that is more money out of the pockets of taxpayers,
so all these things affect regular people in lots of important
direct and indirect ways,” Marlowe said.
Marlowe said the Fed signaled its thinking that the economy is
strong enough to support the rate increase.
“They're clearly focused now on trying to address inflation, and
there's a good chance that we'll see at least one or two more
rate hikes in the not-too-distant future for exactly that
reason,” Marlowe said.
Marlowe said the move has important implications in Illinois.
“When you think about particularly things like diesel prices,
which have been a huge driver of inflation, according to all of
the data, a rate hike like this is designed in many ways to try
to address those kinds of rising prices,” Marlowe said.
Marlowe said it would be ideal if there were cooperation from
the fiscal policy side on taxing and spending.
“If the Trump administration or just the message coming out of
D.C. in general is contradictory to the message that the Fed is
trying to send or it undercuts or weakens or dilutes the message
that the Fed is trying to send, that really takes away one of
the Fed's main tools to try to affect the economy,” Marlowe
said.
Marlowe said presidents have “jawboned” the Fed for years, but
it’s much more pronounced in the current environment.
Brett Rowland and Morgan Sweeney contributed
to this story
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