Page 18 - BusinessWest April 18, 2022

Banking & Financial Services
The Fed Makes Its Move
What Do Rising Interest Rates Mean for Banks and Borrowers?
Last month’s federal funds rate hike by the Federal Reserve — the first of what may be several such increases — was long- awaited and welcome in the banking community, while the Fed hopes it begins to produce its intended effect of cooling the economy and slowing inflation. The impact on loans and credit of all kinds will be meaningful, finance leaders say, but the long-term, historical perspective suggests this is still a very good time to borrow.
IBy Joseph Bednar
t’s a move many in the finance world are calling overdue, and in some ways welcome.
After keeping interest rates low through the first two years of the COVID-19 pandemic, the Federal Reserve hiked the federal funds rate by one-quarter of a percentage point on March 16,
while also suggesting it might issue up to six more small increases before year’s end.
“We’ve lived with this low-rate environment for the last few years, which has been extremely difficult for banks on the margins,” said Brian Canina, executive vice president and chief of Finance and Shared Services at PeoplesBank. “So this was definitely something we have been waiting for.
“Last year was very interesting because, despite the inflation we were seeing, there was no movement on interest rates,” he added. “These have been interesting times, and hopefully, as the Fed contin- ues to monitor this and increase the rates in the future, it would be nice to see us get back to a more normalized interest-rate environ- ment that we’re more familiar with.”
18 MONTH 00, 2022 BANKING & FINANCIAL SERVICES BusinessWest