The Federal Reserve Board’s Federal Open Market Committee meets in two weeks and is widely expected to raise interest rates. Central bankers have indicated they expect to raise rates at least once more this year, and possibly twice. For a look at how the interest-rate process could affect Flagler County residents, Garry Lubi, senior vice president at CenterState Bank in Palm Coast, offers the local spin.
Fed officials seem poised to raise interest rates in June. How many additional rate hikes do you expect this year?
I would say right now we’re anticipating two more hikes. We’re questioning how many more would come in the next year and the following year. I’m not as aggressive on it because the Fed has typically taken it to a point where if they slow the economy down too much that can generate a negative impact. Depending on how the numbers come out in subsequent quarters, it could reduce that.
Talk of a rate hike has been in the news off and on for several months. Do you think the public is still interested or is there a growing sense of “Fed fatigue?”
You have different sectors that are very interested in it. For example, retirees and people who have liquidity they want to keep in CDs and money market accounts, their interest rates have come up. The other piece is business owners are also interested. Right now, you have 30-year fixed-rate mortgages getting into the upper 4 percent range. I would say the public is still listening. Rates are still historically low, so if there has been any level of being numb it has not gone up to the level that begins to raise eyebrows.
What is your outlook for the local economy as interest rates rise?
I would say the outlook, I think, continues to be very positive. Obviously, a sizeable piece of our economy is residential construction so you don’t want to see those rates go too far out of whack to where that causes those sectors to start to slow down. I think that piece of it could come into play if rates got up too high, but at this point I think there is a lot of positive momentum in Florida in general and in our area in particular.