Did you see Federal Reserve Chairman Jerome Powell testify to House Financial Services Committee on Wednesday March 8th?
Powell just said that interest rates are ‘likely to be higher’ than previously expected. To combat runaway inflation the Fed continues to raise interest rates. Restoring price stability means that monetary policy will be tightening for the foreseeable future.
The Federal Reserve has been choking economic growth by raising the cost to borrow money. This is done with the hopes of lowering inflation, with a target of 2%. Currently inflation is currently at 6.4%.
So how does this relate to YOU as a business owner? Higher costs of goods and services, but also higher costs of borrowing money. BUT can your business use capital and make margins that exceed the costs of capital?
Because the dollar has less value, the cash your business is generating is less valuable. So a viable solution for this business problem is to make more cash. Oftentimes, borrowing money to generate more income is completely viable and can be replicated over and over again.