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so this morning the federal reserve expected to take its most aggressive step yet in the war on inflation, raising interest rates by as much as three quarters of a percentage point. that s a lot. that would be the single biggest hike in almost 30 years. so what does that mean for you and your money? here now early start anchor and cnn chief business correspondent christine romans. good morning. well, it s inflation that ails the u.s. economy and the fed is about to deliver very strong medicine. higher interest rates, the biggest increase in decades, it will make it more expensive for families and businesses to borrow money, higher rates for mortgages, credit cards, student loans and car debt, business loans will already cost more. the 30 year fixed rate mortgage road to 5.25%, under 3% in november. rock bottom rates until now fueled a scorching housing market, the hope is higher rates
so if you re in latin america or you re in africa, it s a harder prospect to do that now, particularly in globalization is not in as strong of shape as it has been. so let s talk about those kind of countries, because so far we ve been talking really about the problems of the rich world. huge government intervention, huge technological change. but for a large number of countries, you know, i m thinking of india or indonesia, the government can t spend that much money, it doesn t have money to spend, so it has a public health crisis, it has an economic crisis, and it can t borrow at the rock bottom rates that the western world or japan or china can. what happens to this group which is, of course, the vast majority of the world s population? i think that group of countries has a much tougher time going forward, and for three reasons. it s in large part because many of those countries have much
richer country, which is really what the east asian countries did, what china did, is much, much harder. so if you re in latin america or you re in africa, it s a harder prospect to do that now, particularly in globalization is not as strong of shape as it has been. so let s talk about those kind of countries, because so far we ve been talking really about the problems of the rich world. huge government intervention, huge technological change. but for a large number of countries, you know, i m thinking of india or indonesia, the government can t spend that much money, it doesn t have money to spend, so it has a public crisis, it has an economic crisis, and it can t borrow at the rock bottom rates that the western world or japan or china can. what happens to this group which is, of course, the vast majority of the world s population? i think that group of countries has a much tougher time going forward, and for
that is typical of what happens in an inflation environment. inflation always runs ahead and wages run behind and employers try to adjust to keep up with inflation but once the process begins, it is hard to put the toothpaste back in the tube and i go back to the concern the federal reserve continues to buy something like $80 billion in treasury and $40 billion in mortgage securities every month, it is adding quiddity to an economy that doesn t need it. this is going to be inflationary, they will have to withdraw that liquidity at some time that will be a problem especially for the federal government which is bothering at rock bottom rates. paul: briefly, it doesn t look like the fed will change here anytime soon, we ve only got a few seconds. no, it doesn t as long as the price drops the stock market is