Current Interest Rates
With the current state of The United States, interest rates are fluctuating because of the constant change in the economy along with different events happening around the world that affect our economy here in America.
Today’s Average Interest Rates
As of July 28th the current federal reserve interest rate is 2.25% to 2.50%. At first glance this interest rate doesn’t seem too high, but the interest rate was raised 0.75% for the first time since 1994. The interest rate was near zero in March, and with the current trends in the American economy it has steadily been raised in consecutive months. The interest rate may continue to go up solely because of the current inflation in America, which has reached a 40 year high, making everything more expensive.
How Will The Economy Be Affected?
The interest rates going up are a direct cause from the rising inflation from the past months, this causes everything to be significantly more expensive. Gas, groceries, homes etc. For a majority of America this is crushing, many homes struggle to pay for gas that reaches above four dollars a gallon. The economy as a whole is down and it looks to continue this way with interest rates expected to make another jump after the month of July.
Businesses & How The Rising Interest Rate Will Affect Them
These high interest rates mean a lot of things for businesses but more importantly small businesses, who usually get hit by these rates the hardest due to the smaller amount of money coming in unlike some larger businesses who can afford to pay those high rates. What happens for small businesses if this rate continues to go up? Many small businesses will have to cut back on spending along with possibly cutting some employees. A rising federal interest rate means the economy is not doing well and there isn’t enough money in circulation. These rates will go up again in the coming months as the rising inflation doesn’t have an end in sight.
What Changes Will Small Businesses Have To Make With to Rising Interest Rates?
Small businesses get put in an awkward situation with rising inflation and interest rates because they are trying to grow their small business but at the same time trying to not lose profit due to everything being more expensive. Small businesses get hurt by interest rates more because many small businesses still have loans being paid off from the bank because they are still a new, growing business.
It’s essential that small businesses have an accurate picture of their finances as inflation and interest rates continue to rise. Hiring an outsourced accounting can help ensure they have the financial data they need to make important decisions. Hiring a part-time outsourced CFO can be a very economical option while getting advice from a financial expert during these challenging times.
The economy seems to still be trending in the wrong direction which will keep interest rates high and will continue to hurt small businesses. As we all hope inflation goes down by the end of the year, it may stay the same or even rise and small businesses have to start preparing if you haven’t already. Cutting spending on the non essentials will help business in the future.
Hire Limitless CPAs, Controllers and CFOs To Help Navigate Rising Interest Rates for Small Business
As a small business Limitless knows the ins and outs of how to handle finances through inflation. Let us assist you with the ever changing economy, our CPAs, financial controllers, and part-time CFOs allow you to focus more on your business and lets us handle your finances through these hard times.