The Federal Reserve's rate increase Wednesday will not slow President Donald Trump's economic agenda, but it will make home mortgages more costly, economist Peter Morici told Newsmax TV.
"I don't think this is going to affect the economic expansion very much," Morici, a professor at the University of Maryland, told "Newsmax Now" guest host Kirsten Haglund in an interview. "These are still historically very low rates."
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The Fed raised its core lending rate by a quarter-point and forecast a steeper path of increases in 2019 and 2020, citing an improving economic outlook.
The hike was the first under Fed Chairman Jerome Powell, whom President Trump nominated to the post in November. His term began last month.
Morici, like other Fed policy makers, projected at least two more rate increases this year because of Trump's tax plan, higher government spending and concerns about rising inflation.
"There was a cautionary note about inflation," he told Haglund, referring to the board's statement regarding the rate increase. "The Fed has its eye on that more than before.
"The tax plan and the spending, all of that accelerates growth a bit and makes it more likely that they'll raise rates a little more quickly."
For most Americans, however, the Fed increase translates to higher interest paid out on bank savings accounts and more money being paid out for mortgages, Morici said.
"They're likely to see more interest paid by banks in the coming months on savings accounts — and they can expect to pay a little bit more for a mortgage," he told Haglund.
"I would expect, overall, that mortgages would become a percentage point more expensive, something in that range."
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