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GOBankingRates: Kevin O’Leary Warns of Rate Hike ‘Crisis’ — Who’s Suffering Most?

Yaël Bizouati-Kennedy | August 25 , 2023

Renowned investor Kevin O’Leary just warned that the U.S. has a “crisis emerging” because of the pace of interest rate hikes impacting consumers and small businesses as well. Following a short breather — with a pause in June after 10 consecutive rate hikes — the Federal Reserve increased its rates for the 11th time since March 2022 after its July Federal Open Market Committee meeting. The Fed raised interest rates by 25 basis points, taking the benchmark borrowing costs to their highest level in more than 22 years.

As Frost Investment Advisors’ President, Managing Director and Chief Investment Officer Mace McCain noted, the Senior Loan Officer Opinion Survey on Bank Lending Practices shows small business loan credit standards tightening over the last year. McCain also noted that the National Federation of Independent Business Small Business Survey shows small businesses being negatively affected by tighter credit and higher interest rates. “Small businesses are disproportionately hurt by rising rates due to often borrowing at floating rates. Larger companies can tap the bond market, which is overwhelmingly fixed rate and, hence, not immediately affected by rising rates.”

Excerpted from GOBankingRates on August 25, 2023. To read full article, click here.

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