Since the economic collapse in 2008, interest rates have been at historically low levels. As the economy slowly improves, there is pressure from some groups to raise the interest rate to ward off inflation. The Federal Reserve recently raised rates, but some argued that these increases did not go far enough. They’re now contemplating further increases.
Even with small increases, the interest rate remains at historically low levels. But with economic recovery on shaky ground, some worry that even modest increases could have a negative effect on the economy. They argue that the Fed should be doing everything possible to keep the economy rolling instead of trying to put the brakes on.
In the construction industry, the cost of borrowing is low but there are many other worries that impact construction projects. The biggest fear is that interest rates could ice demand for new projects. Demand is steadily improving for commercial real estate, but with some missteps that demand could completely disappear. Contractors are watching the situation very closely for any changes.
The next policy meeting of the Federal Reserve is set for mid-March. There, they will debate the merits of another rate hike (the last was in December). Any rate hike will likely be modest, but it could play a major impact on new construction projects. But there are signs that inflation may be rising, giving these policy makers reason to raise the interest rate slightly.
At Manion Stigger, we know that interest rates can have a big impact on the bottom line of our clients. Potential rate hikes mean it’s important to move quickly once a project is identified. To speak with a construction law attorney about your project, contact Manion Stigger today for an in-depth consultation.