Local bankers react to latest Fed move

Cape Girardeau banking leaders are weighing in on the Federal Reserve Board's decision Wednesday, March 22, to raise its key interest rate for the ninth time since March 2022.

The latest hike, 0.25%, like the others before it, is designed to discourage inflation by increasing the cost of borrowing.

The benchmark rate is now the highest it's been since 2007.

Wade Bartels,Alliance Bank

Wade Bartels,Alliance Bank

"My hope is the Fed will now pause and give some time for the increases to be digested," said Wade Bartels, Alliance Bank president/CEO. "Inflation seems to be cooling and almost daily you hear about large companies cutting their workforces. To me, this is an obvious sign the economy is cooling. (Wednesday's) smaller increase is reflective of (the Fed's) recognition of the current economic situation."

Robbie Guard,MRV Banks

Robbie Guard,MRV Banks

"Unwarranted," said Robbie Guard, MRV Banks' senior vice president and market president, adding the cumulative effects of the Fed's rate hikes "have helped cause" the current banking crisis — referring to the collapse in mid-March of two banks, one in California and the other in New York. "Consumer spending was lower in February compared to a strong January, and banks have seen demand in loans erode. Businesses are now seeing interest rate expenses doubling in some cases, and with that, businesses that set their business model up on 4.5% rates could be in trouble."

James P. Limbaugh,Montgomery Bank

James P. Limbaugh,Montgomery Bank

Jim Limbaugh, Montgomery Bank executive vice president and Cape Girardeau regional president, called the Fed's move "predictable," adding, "we believe the Fed will (now) pause and assess inflation data as well as determine the best solutions concerning safety and soundness in the banking industry. This is especially 'top of mind' with the regulatory agencies given the recent Silicon Valley Bank debacle."

Interest rate hikes initiated by the Federal Reserve, say industry sources quoted by CNN, will continue to impact consumer savings, loans, credit cards and investments.

Greg McBride, chief financial analyst for www.bankrate.com, said Friday, March 24, the average credit card rate is now at a record high above 20% -- well above the 16.3% average in first quarter 2022.

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