As Fed grapples with the consequences of its tightening monetary policy, Philadelphia Fed President Patrick Harker voiced concerns regarding the implications for small businesses. In a virtual event, Harker underscored the challenges small firms are facing due to limited access to capital, and suggested Fed should refrain from contemplating additional interest rate hikes
“Small firms are really struggling with access to capital,” Harker pointed out, echoing the sentiments of bankers who are wary that their business models may not withstand further hikes.
“Some of the bankers I’ve talked to are concerned that their business plans just aren’t going to be able to make it at the higher rates. I heard that warning a lot over the summer,” Harker elaborated.
In light of these concerns, Harker advocated for a pause in rate adjustments to evaluate the full impact of the existing policy on small businesses. By holding rates steady, Fed can provide a reprieve for struggling firms and assess the broader economy before making further moves.
“This is why we should hold rates steady, we should not at this point be thinking about any increases, because if that’s true — and it is true — then we should let that ride out,” Harker asserted.
