BusinessJanuary 3, 2023
Local bankers look ahead in new year after Fed's latest move
Two banking leaders in Southeast Missouri predict continued economic volatility in the new year when asked for their thoughts about the effectiveness of interest rate hikes imposed in 2022 by the Federal Reserve Board. The most recent half-point increase, or 50 basis points, was announced Dec. 14 and was the seventh hike instituted last year in the Fed's aggressive campaign to bring down the nation's highest inflation since the early 1980s...
Two banking leaders in Southeast Missouri predict continued economic volatility in the new year when asked for their thoughts about the effectiveness of interest rate hikes imposed in 2022 by the Federal Reserve Board.
The most recent half-point increase, or 50 basis points, was announced Dec. 14 and was the seventh hike instituted last year in the Fed's aggressive campaign to bring down the nation's highest inflation since the early 1980s.
"I am not sure there is any confidence in the Fed to right the ship," said Jay Knudtson, executive vice president of Cape Girardeau's First Missouri State Bank. "We are anticipating a rocky 2023 for our customers. A total of $931 billion in government stimulus has totally masked true performance of both businesses and individuals. There no longer appears to be any room for error. These excessive rate hikes in such a short period will make any type of recovery much more difficult and more prolonged."
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Kevin Greaser, community bank president with First Midwest Bank of Cape Girardeau, is paying close attention to the nation's jobs report.
"I just read an economist who said the Fed is focused on the job market with one report suggesting there are 10 million job openings in the U.S., currently. This translates into higher wages to attract people into the workforce and that is inflationary," Greaser said. "It seems we will see many more layoffs being announced before the Fed is done [with rate hikes]."
Federal Reserve Board chairman Jerome Powell is on record with a goal of reducing inflation to a 2% level.
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