GLCNF - Higher Rates Insidiously Creep Into The Boardroom
2024-02-24 01:08:00 ET
Summary
- Even if the U.S. Federal Reserve starts reversing its policy later this year as expected and makes money available a little more cheaply, corporate borrowing expenses will nevertheless keep rising.
- Companies with better credit ratings did so more easily than their weaker peers, but such initiatives were fairly widespread.
- The Boston Fed found that it takes five quarters before an initial 1 percentage point increase in the benchmark rate has its peak effect on a company’s interest expense.
By Breakingviews
After heaving a sigh of relief for the end of interest rate hikes, chief executives and investors should be taking a deep breath. Even if the U.S. Federal Reserve starts reversing its policy later this year as expected and makes money available a little more cheaply, corporate borrowing expenses will nevertheless keep rising. To cover them, companies could be forced to seek cutbacks elsewhere. Stock buybacks, new projects and cash-funded takeovers look especially vulnerable....
Higher Rates Insidiously Creep Into The Boardroom