Slightly positive implications of Fed rate cut for carriers and shippers
“Yesterday, Federal Reserve officials decided to add some additional stimulus into the economy, settling on a 25 basis point reduction in the federal funds rate at the conclusion of the July 30-31 Federal Open Market Committee (FOMC) meeting.” – According to the article in freightwaves.com and its author Ibrahiim Bayaan
Freight markets are affected by a rate cut in a few different ways. First, freight activity is derived demand; the amount of transportation services that shippers demand is directly affected by the demand for the goods that shippers sell. The rate decrease provides a boost to consumer and business spending. This, in turn, should help drive additional manufacturing, construction, and import activity.
Carriers, of course, will begin to notice modestly lower interest rates throughout the economy. Financing terms on truck and equipment purchases should come down slightly in response to the interest rate cut. In addition, looser monetary policy generally makes it easier for smaller, less credit-worthy carriers to receive loans from banks. – Bayaan also wrote in his article.
Read the full story HERE
Source and credits: freightwaves.com / Ibrahiim Bayaan, Chief Economist & Market Expert and Mario Pawlowski / iTrucker