Local bankers comment on better inflation news

U.S. Labor Department reported Thursday, Jan. 12, the biggest monthly decline in consumer prices since April 2020, in the earliest days of the COVID-19 pandemic — leading some economic analysts to suggest the Federal Reserve should pause any contemplated new increases in interest rates.

Consumer Price Index, said the Bureau of Labor Statistics, fell 0.1% in December, with last fall's steep drop in gasoline prices credited for much of the CPI decline.

Local input

Three Cape Girardeau bankers were invited to comment by the Southeast Missourian on the news.

James P. Limbaugh, Montgomery Bank

James P. Limbaugh, Montgomery Bank

"We are of the opinion another 25 to 50 basis point increase has already been baked into the Fed's plan," said James P. Limbaugh, Montgomery Bank executive vice president and Cape Girardeau regional president. "[This hike] will more than likely complete the Fed's upward movement. We believe [the Fed] will then pause to assess where the economy is generally and where inflation is specifically in the second quarter. Mortgage and construction loan rates have already slowed significantly."

Clint Karnes, Wood & Huston Bank

Clint Karnes, Wood & Huston Bank

Clint Karnes, community bank president for Wood & Huston, said he hopes a pause is coming.

"I'd like to see the Fed take a breath and not approve a Feb. 1 increase, [or] limit any increase to 25 basis points," Karnes said. "We have seen the prime rate go from 3.25% in March to its current level of 7.5%, and with inflation showing signs of slowing, I would hope they would allow some time to see if current rates continue to hold. I do believe some of the inflationary easing, especially in the housing market, directly comes from the higher rates."

Robbie Guard, MRV Banks

Robbie Guard, MRV Banks

Robbie Guard, MRV Banks' senior vice president and market president, said he thinks another interest rate hike is coming, a prospect he said he finds regrettable.

"While I believe a Fed increase is inevitable, I would say it is not warranted," said Guard, who is also Ward 4 Cape Girardeau city councilman.

"Nationally, banks have seen loan demand decrease while consumer spending is being impacted negatively as well. We are seeing the negative effects of pandemic spending," he added.

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