PEORIA, Ill. (WMBD) — The Federal Reserve System on Wednesday raised interest rates by three-quarters of a point, the fourth time this year in an effort to reign in runaway inflation.

Inflation is at a 40-year high, sitting at 9.1% in June. The federal funds rate is 2.25% to 2.5%; it was close to zero percent at the beginning of the year.

“Anything to do with borrowing, either on the consumer or the business side, is going to cost more,” said Kurt Rankin, senior economist at PNC Financial Services Group.

Rankin said the Fed considers 2% as “stable inflation” and normal for a healthy economy.

“The Fed’s tasked with maximizing employment in the context of stable inflation…because prices don’t go back down. They may grow to more, a slower pace going forward, but they’re not going to come back down to where they were prior to this inflationary bout,” he said.

Rankin said the interest rate hikes will affect short terms loans the most, such as credit cards and car loans. By raising interest rates, the Fed is slowing customer demand and business growth.

“So the Fed term they’ve been using correctly, in my view, is demand destruction by raising rates or raising the cost of borrowing and therefore the cost of doing business,” Rankin said.

Leslie Rothan, the managing broker at Rothan Group EXP Realty, said the Peoria area real estate market remains affordable. Even as interest rates climb, buyers are flocking from coastal cities and its expensive real estate.

“I think we are going to continue to see a trend of larger market individuals purchasing a home into the Peoria area, the Greater Peoria area because of the affordability,” she said.

When it comes to mortgage rates, Rothan said homeowners can always refinance when rates go down.

“I’ve heard somewhere you marry the house and date the interest rate… Interest rates [are] always going to be changing. So if you have that mentality to date the interest rate then when if it decreases, refinance your home,” she said.

As for labor market, Rankin said the Peoria market has a healthy cushion even if the economy dips into recession.

“Those now hiring signs will be will come down first. Layoffs won’t be necessary because consumer demand will just be coming back to meet existing staffing level… The preferable option is in fact a mild recession, especially considering the strength of labor markets and while the unemployment rate might go up nationally, it’s going to be still well below what we might see in a normal bubble-induced recession,” he said.

Rankin said there will be more federal funds rate increases later in the year. He said PNC is anticipating rate hikes in September and December, tacking on another 1% interest in sum.