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Interest rate increase by the Fed affects Bloomington bond issue

Parking area
Bloomington Public Library

People who buy homes and cars aren't the only ones paying higher interest rates on loans. City of Bloomington residents will pay more as well.

In the couple months between the time the Bloomington City Council approved a $20 million bond issue for the library and O'Neil pool projects and the time the bonds went to market, interest rates went up more than a point.

The bump could cost the city about $2.8 million more over the next 20 years because of that lag. The city said the projected annual debt service for the bonds back in March was about $1.4 million. When the interest rate locked in debt service turned out to be $140,000 higher per year.

It's not like the city could have done much differently. Back in late fall the Fed had not projected any interest rate hikes. Now the Fed expects seven this year in an attempt to aggressively counter inflation.

Of course inflation cuts two ways. Today's money will buy a lot less in 20 years, which is why people, and cities, pay for large purchases or projects over time.

WGLT Senior Reporter Charlie Schlenker has spent more than three award-winning decades in radio. He lives in Normal with his family.