JACKSONVILLE, Fla. – The Federal Reserve on Wednesday intensified its drive to tame high inflation by raising its key interest rate by three-quarters of a point — its largest hike in nearly three decades — and signaling more large rate increases to come that would raise the risk of another recession.
The move the Fed announced after its latest policy meeting will increase its benchmark short-term rate, which affects many consumer and business loans. The central bank is ramping up its drive to tighten credit and slow growth with inflation having reached a four-decade high of 8.6%, spreading to more areas of the economy and showing no sign of slowing.
News4JAX spoke with owners and managers that are starting up or expanding in Northeast Florida — like Homespun Kitchen. It’s been operating in Atlantic Beach since 2009, but it’s working to expand to Riverside.
Cody DuClos, manager of Homespun Kitchen, says things are on track — but the move hasn’t come without its challenges.
“We’re just having to find things that are available and change, you know? Sort of how we expected things to be around what we can get,” DuClos said.
He’s busy getting the new location up and running for an early July opening. He said the expansion has seen delays and logistical challenges that he didn’t expect.
“Throughout COVID, we’ve had a hard time getting things like packaging cups, that nature, when it comes to opening the new restaurant,” DuClos said. “We’re seeing delays of up to six months on equipment, things like coolers, ice makers and whatnots. We’ve been having to look around, get creative to find things that are actually available now that we can use.”
In addition to months-long delays for equipment and supplies, DuClos said that inflation and the subsequent interest rate hike are discouraging more people from spending money, which cuts into every business venture.
Other business owners say they likely would have reconsidered plans to expand had they known where the economy would turn.
Kristen Tackett is the local business development officer for Florida First Capital Finance Corporation. She helps businesses get financed and started.
“Every time the rate goes up, like today, your payment just went up, and it will literally price you out of, you know, business, quite frankly,” Tackett said.
Tackett says the stressful economic conditions don’t prevent businesses from starting, but they do make it far more risky and they require extra caution and consideration.
“If you’re financing stuff, making sure you’ve got the best possible terms you can get fixed interest rates so you know exactly what your monthly payments are on that type of stuff. And cash — you’ve got to have cash to weather these storms,” Tackett said.
Tackett said if you’re considering starting or expanding a business, exploring all your financing options is crucial.