As reported across news outlets like the Wall Street Journal, major U.S. stock indexes fell on Wednesday after the Federal Reserve raised interest rates by 0.75 percentage points to combat inflation.
The central bank signaled plans to keep raising rates, though possibly in smaller increments. Rate increases and hopes of a Fed “pivot” have stoked big swings across stock and bond markets this year. Mr. Powell’s message on Wednesday was that no pivot is in the immediate future.
Consumer Effects
While there may be plenty of downsides in the form of higher borrowing costs for consumers, one positive outcome is that your savings may start earning a little money after years of barely-there interest. “Interest rates have increased at the fastest pace in 40 years,” said Greg McBride, chief financial analyst at Bankrate.com. “Mortgage rates have rocketed to 20-year highs, home equity lines of credit are the highest in 14 years, and car loan rates are at 11-year highs. Savers are seeing the best yields since 2008 – if they’re willing to shop around.”
Changes to Rates Offered by Commerical Lenders for Equipment Sale Leaseback Transactions
While businesses shouldn’t see an immediate increase in an equipment sale leaseback effective interest rate, the November 2, 2022 interest rate increase may reflect into higher payments to borrowers. Since it does not seem the Fed is changing course anytime soon, albeit with slower increases, it may be a good time to conduct a transaction review before further rate increases.