SAN DIEGO – The Federal Reserve increased interest rates to a half percent to tackle the worst inflation in 40 years.

Alan Gin, economic professor with University of San Diego, says the increase will slow down the San Diego housing market.

“With the interest rates going up that is going to cause payments to be higher then it might price some people out of the market,” said Gin.

Gin says interest rates will only affect some homeowners in San Diego, and those looking to buy.

“If you have a 15 or 30 year mortgage you have locked in the interest rate and you won’t be affected. But if you have a variable rate loan or if you are thinking of going into the housing market now then you are going to have to pay higher interest rates,” said Gin.

Federal Reserve Chair, Jerome Powell said in a press conference Wednesday “Inflation is much too high, and we understand the hardship it is causing.”

The half percent increase is the Federal Reserve’s highest increase since the year 2000.

“The process of getting there involves higher rates, higher mortgage rates, higher borrowing rates. It’s not going to be pleasant either but in the end everyone is better off – in particular people on fixed incomes,” said Powell.

Americans should expect to see higher interest rates on mortgage, credit card, car and personal loans.

The federal reserve plans to increase rates even further, but Gin says they wont do it all at once.

“Reducing consumer spending, reducing investment by businesses, that would slow the economy down and that would put less pressure then on prices,” said Gin.