When the Federal Reserve recently raised the federal funds rate, and set off a rise in short-term interest rates, it signaled that more increases were on the way. While the impact may be felt differently by an individual bank or credit union, there’s no doubt that financial institutions must prepare for the “new normal” of rising interest rates — especially when it comes to marketing.
A Challenge for Some, an Opportunity for Others
Seeking to temper signs of inflation in the economy, the Fed recently raised the federal funds rate from 1.5 to 1.75 percent. That immediately triggered an increase in the prime rate, which, according to Investopedia, “represents the credit rate that banks extend to their most credit worthy customers.” Borrowing costs for all other consumer credit is pegged against this number.