Montana and Missoula to Feel Effect of Fed Rate Increase
On Wednesday, December 16, Federal Reserve Chairwoman Janet Yellen announced that the Fed would raise short term interest rates for the first time since they bottomed out in 2008 during the recession. According to Montana Bureau of Business and Economic Research Director Patrick Barkey, the interest rate change will be felt in Montana.
"Montanans are savers and investors and borrowers just like anyone else, and the markets for those things are national," Barkey said. "The Federal Reserve's actions will show up, or start to show up in everything from mortgage rates to car finance rates to even rates of interests on CDs and things like that."
Barkey said that larger borrowings, like the $158 million bond issue recently passed for Missoula County Public Schools or the $48 million Parks and Trails Bond, will feel the sting of the rate increase more than others.
"Numerically it's a matter of degree," Barkey said. "For a big ticket bond like for a school or a road or something, quarter-point, half-point adjustments are a big deal in terms of the cost of borrowing. Nonetheless, they are still incremental changes, I'm not saying these are meaningless changes because they're not."
According to Barkey, some of the rate increase may already be in effect as rates could have been adjusted in expectation of the announcement, but it will be difficult to know for sure exactly when the change fully arrives.