Well, it happened. The Federal Reserve raised interest rates last week a quarter point, marking the first rate increase in three years.
Most economists felt this was inevitable, and I’ve been talking about this for a while now. Well, we’ve moved out of speculation and into reality – with the inflation numbers being what they are (the highest in 40 years), raising rates is the only real response the Federal Government has.
But more telling are the comments by Federal Reserve Chairman Jerome Powell on Monday, 3/21/2022. In short, he laid the groundwork for multiple increases this year, and those increases may be larger than is typical.
Specifically, he stated “if we conclude that it is appropriate to move more aggressively by raising the federal funds rate by more than 25 basis points at a meeting or meetings, we will do so.”
In quoting him, news outlet Reuters called it his “most muscular message to date”.*
That’s fairly strong language, and should be taken as a very clear message to businesses everywhere. Rates will not only continue to rise, they will rise higher than we’ve become accustomed to.
How long will this go on? If history is any indicator, we’re looking at more than a year. Maybe several years. Inflation doesn’t magically fall. It takes time. Lots of time.
This means rates will rise, and rise again and again until supply and demand are more in synch, and inflation falls.
What This Means for Your Company
It means you are going to pay more to finance equipment tomorrow than you will today. And the longer you wait, the more you will pay. This will happen across the board: when the Fed rate goes up, the rate you pay goes up. Crest Capital, as well as every other lender in existence, is powerless to prevent this.
My advice? If you are going to need equipment in the next 18-24 months, get it now.
Seriously, you will pay less now than you will in just a few months. It is very possible – actually, based on comments, it’s almost a certainty – that we’ll see four or five more rate increases this year. Some called it speculation a month ago, but the writing on the wall could not be any clearer.
Lock in with a great rate now and shelter yourself from the inevitable increases. If you want to see what a current monthly payment looks like, use our quick and easy equipment financing monthly payment calculator.
*https://www.reuters.com/business/fed-must-move-expeditiously-if-needed-more-aggressively-powell-says-2022-03-21/