December 15, 2022— As anticipated, the Federal Reserve announced a 50 basis points increase to the federal fund rate, resulting in the prime rate reaching 7.5%. This is the seventh time the FED has raised rates this year in an attempt to lower inflation. Additional increases are likely, as the FED appears to be committed to slowing inflation by continuing to raise interest rates.
Many economic experts project a recession in the second half of 2023 due to the tighter monetary and fiscal policies. The implications of the rising rates and looming recession will have a varied impact on all industries, including the key industries we serve: Insurance, CPA, and RIA.
Though slightly slowing in the last quarter of this year, these industries have experienced strong M&A activity this year and have a stable long-term outlook. In the short-term, insurers may see a decrease in the number of policyholders, as households may look to drop coverage to save money. CPAs will likely see rising costs as they look to retain and attract talent while also investing in digital transformation. In the RIA industry, firms may be challenged to maintain desired fee structures as their AUM is impacted by the volatile stock market.
However, prudent business owners in these and other industries will continue to look for opportunities to grow. Capital is still needed for growth, and debt remains relatively inexpensive. In 2023, as business owners pursue M&A and succession opportunities, they should be prepared with their deal team, as early as possible in the new year, to quickly capitalize on opportunities when there is a strategic fit and the benefits outweigh the costs.
About Oak Street Funding Indianapolis-based Oak Street Funding, a First Financial Bank company, provides customized financial solutions for businesses in various industry sectors and third-party loan servicing for financial institutions. Oak Street Funding incorporates industry knowledge, easy-to-use technology and exceptional employees to deliver top-quality service and capital products to niche businesses nationwide. With in-house sales, underwriting, and servicing teams, and direct access to the CEO and executive team, Oak Street Funding is well-positioned to meet lending needs of borrowers in all stages of the business life cycle.
Media Contact: Rae Hostetler Hostetler Public Relations Representing Oak Street Funding 317-733-8700 Rae@HostetlerPR.com