For the sixth time this year, the Federal Reserve Board has lowered interest rates, this time by 1/4%.
The Fed’s action today (June 27), almost certainly will result in banks lowering their benchmark prime interest rate by 1/4% to 6.75%, effective tomorrow.
The Fed decided to lower rates again because it continues to be more worried about a recession than about inflation.
The rate cut is good news for RV dealers because many have their floorplan interest rates pegged to the prime, so their interest expenses will be lowered again.
However, longer-term loan interest rates have not declined as much this year as short-term rates, such as the prime. Consequently, the Fed’s actions have, so far, not encouraged huge numbers of consumers to buy RVs or make other purchases.
Additionally, some lenders involved in the RV industry are beginning to worry that the Fed might lower short-term rates to the point that inflation will begin to accelerate. That could cause the Fed to quickly move to raise rates, which would further damage consumer confidence, according to some lenders.