SALISBURY, Maryland – Despite long-anticipated interest rate cuts, the Federal Reserve has cut current interest rates because it has failed to meet its goal of keeping national inflation below 2%. It was decided to keep it at 7.9%.
In Wicomico County, Salisbury Area Chamber of Commerce President Bill Chambers told WMDT that many businesses are considering obtaining bridging loans or lines of credit to expand the workforce for many of the region's seasonal businesses. He said the news came at a difficult time.
He said the hospitality, restaurant and entertainment sectors could be hit hard, adding to a tough few years of lower spending due to inflation.
“This is certainly creating cash flow challenges and making it quite difficult to meet financial obligations. That's what businesses have to pay, like payroll taxes and insurance, and these rising interest rates. Unfortunately, the timing is bad,” Chambers said.
He said the short-term rental market in vacation destinations, including Ocean City, could also be affected because condo rentals come with the same 7.9% 30-year fixed rate. He said with interest rates flat, refinancing was also out of the question for small landlords who could lose money on extra income.
Chambers said he expects the Fed to change its annual interest rate target from 2% to 3%, saying the longer interest rates remain high, the more consumers will spend less and businesses will be hit harder.
