SIOUX FALLS, SD (KELO) — For the fifth time in six months, the Federal Reserve has raised interest rates in a bid to fight inflation.
This week, rates rose 0.75 percentage points, now up three percentage points since March.
“It’s kind of unheard of, so many rate hikes in a short period of time,” said Matt Pekoske, assistant vice president of business services at Levo Credit Union.
Federal interest rates are now at the highest level since 2008, and many believe the increases are not over yet.
“I anticipate we’re going to see more of that before the end of the year,” said Steve Stofferahn, vice president of lending at Levo Credit Union. “I don’t know where it’s going to end.”
This can be a daunting unknown for business owners and consumers struggling with credit card debt or other variable rate loans.
“It may have been a great loan a few years ago before covid or because of covid where they were getting prime plus 0.05% or something of that nature, now with prime increasing as much as last year their rates went up that high,” Pekoske said.
In addition to dealing with these higher payments, they also have to deal with higher costs due to inflation.
“With businesses, if they’re still trying to grow in this type of environment, the first thing I would recommend is to speak with your accountant or commercial loan officers and get a business portfolio review,” Pekoske said.
Although rates are changing rapidly, financial experts say there are still ways to successfully manage growth.
“The actual rates we’re at right now aren’t that far off the norm, we’ve often been above that,” Stofferahn said. “We’ve gotten pretty used to an ultra-low rate environment, there are always favorable rates from a historical perspective, so a consumer or a business shouldn’t just stop spending or stop borrowing. “
Levo Credit Union says everyone should seek expert advice and review their current portfolio to make changes like rate locks or other restructurings to help navigate ever-changing interest rates.
“Just visit your loan officer, there are always ways to structure loans, to try to save you money in some way,” Pekoske said.
As Sioux Falls continues to experience record business growth this year, financial experts say rising interest rates could slow some of that growth. The rising cost of doing business will likely continue to pass through to consumers.