Federal Reserve Board policymakers met earlier this month to discuss interest rates and the state of the U.S. economy. While the Federal Open Market Committee did not raise interest rates, there is wide speculation that the central bank will make a monetary policy move at its next meeting, scheduled for June 12-13. For a look at what Fed monetary policy maneuvering means in Flagler County, Cheryl Tanenbaum, chief financial officer at Intracoastal Bank in Palm Coast, offers the local spin.
With the Fed expected to raise interest rates two or possible three more times this year, what kind of impact will that have on consumers?
Obviously it’s is going to affect lending because interest rates will go up on loans, especially if you have variable rate loans, lines of credit, or credit cards. You might see a few small increases on CDs, etc. I think our customers are anxiously waiting for the Fed to raise rates so they can earn more in interest, but I think it’s going to be a long wait before they see any changes on the deposit side.
How important is it for the Fed to be as transparent as possible regarding interest rate policy?
I believe its important that the fed be transparent. It’s important for people to know what is going on, what their policies and objectives are. There are so many variables as far as the policies go and the markets react differently. I think it has to be credible. When you are secretive about anything you lose credibility.
How do interest rate hikes affect a community bank like Intracoastal?
Banks tend to earn more money because they will be charging more to borrow. It is all relative, in my opinion, so I don’t think it will have a huge impact. Rates will go up on loans and deposit rates will go up slowly. I don’t think it will be that big of a deal to any bank.
What is your outlook for the local economy in the coming months?
I think our local economy is growing and it’s exciting to see more building going on, more homes going up. We’re starting to see more businesses expand and new businesses coming into the market in Volusia and Flagler counties. I think we are definitely on that road to recovery and it’s excited to see the growth in our market. I am feeling positive about everything going on.